In the last year, many Customers Bancorp, Inc. (NYSE:CUBI) insiders sold a substantial stake in the company which may have sparked shareholders' attention. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Customers Bancorp
Customers Bancorp Insider Transactions Over The Last Year
The Founder, Jay Sidhu, made the biggest insider sale in the last 12 months. That single transaction was for US$4.1m worth of shares at a price of US$41.47 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$55.77. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 6.0% of Jay Sidhu's holding. Notably Jay Sidhu was also the biggest buyer, having purchased US$660k worth of shares.
Happily, we note that in the last year insiders paid US$660k for 55.65k shares. But they sold 184.15k shares for US$7.5m. In total, Customers Bancorp insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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Insiders At Customers Bancorp Have Sold Stock Recently
The last quarter saw substantial insider selling of Customers Bancorp shares. In total, insiders sold US$5.1m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Insider Ownership
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. Customers Bancorp insiders own about US$134m worth of shares (which is 7.5% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Customers Bancorp Insiders?
Insiders haven't bought Customers Bancorp stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. It is good to see high insider ownership, but the insider selling leaves us cautious. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. In terms of investment risks, we've identified 1 warning sign with Customers Bancorp and understanding this should be part of your investment process.
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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 of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.