Quite a few TowneBank (NASDAQ:TOWN) insiders sold their shares over the past year, which may be a cause for concern. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Check out our latest analysis for TowneBank
The Last 12 Months Of Insider Transactions At TowneBank
In the last twelve months, the biggest single sale by an insider was when the insider, Brad Schwartz, sold US$476k worth of shares at a price of US$30.00 per share. So what is clear is that an insider saw fit to sell at around the current price of US$28.17. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
Over the last year, we can see that insiders have bought 39.31k shares worth US$1.0m. But they sold 51.52k shares for US$1.5m. All up, insiders sold more shares in TowneBank than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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Insiders At TowneBank Have Sold Stock Recently
There was substantially more insider selling, than buying, of TowneBank shares over the last three months. In total, insiders sold US$750k worth of shares in that time. On the flip side, insiders spent US$1.1k on purchasing shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
Insider Ownership Of TowneBank
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that TowneBank insiders own 8.0% of the company, worth about US$171m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At TowneBank Tell Us?
The stark truth for TowneBank is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing TowneBank. While conducting our analysis, we found that TowneBank has 2 warning signs and it would be unwise to ignore them.
Of course TowneBank may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.