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Should You Be Worried About Insider Transactions At Meridian Bancorp, Inc. (NASDAQ:EBSB)?

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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Meridian Bancorp, Inc. (NASDAQ:EBSB).

What Is Insider Buying?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.

View our latest analysis for Meridian Bancorp

Meridian Bancorp Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Director, Gregory Natalucci, sold US$110k worth of shares at a price of US$15.77 per share. That means that an insider was selling shares at slightly below the current price (US$18.66). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 10% of Gregory Natalucci's stake.

Over the last year, we can see that insiders have bought 1429 shares worth US$22k. But insiders sold 13500 shares worth US$214k. In total, Meridian Bancorp insiders sold more than they bought over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

NasdaqGS:EBSB Recent Insider Trading, October 8th 2019
NasdaqGS:EBSB Recent Insider Trading, October 8th 2019

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insider Ownership of Meridian Bancorp

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Meridian Bancorp insiders own 3.9% of the company, worth about US$37m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Meridian Bancorp Insiders?

The fact that there have been no Meridian Bancorp insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by Meridian Bancorp insiders. But it's good to see that insiders own shares in the company. Of course, the future is what matters most. So if you are interested in Meridian Bancorp, you should check out this free report on analyst forecasts for the company.

But note: Meridian Bancorp may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.