Have Preferred Bank Insiders Been Selling Stock?
Some Preferred Bank (NASDAQ:PFBC) shareholders may be a little concerned to see that the Chairman, Li Yu, recently sold a substantial US$2.2m worth of stock at a price of US$104 per share. However, that sale only accounted for 3.1% of their holding, so arguably it doesn't say much about their conviction.
Preferred Bank Insider Transactions Over The Last Year
In fact, the recent sale by Li Yu was the biggest sale of Preferred Bank shares made by an insider individual in the last twelve months, according to our records. So we know that an insider sold shares at around the present share price of US$103. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
Over the last year, we can see that insiders have bought 4.46k shares worth US$431k. But they sold 89.63k shares for US$8.7m. Over the last year we saw more insider selling of Preferred Bank shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Check out our latest analysis for Preferred Bank
I will like Preferred Bank better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.
Insider Ownership
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 8.0% of Preferred Bank shares, worth about US$97m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Do The Preferred Bank Insider Transactions Indicate?
Insiders sold Preferred Bank shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that Preferred Bank is growing earnings. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. While it's good to be aware of 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. For example - Preferred Bank has 1 warning sign we think you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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 of direct interests only, but not derivative transactions or indirect interests.
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