Orrstown Financial Services, Inc. (NASDAQ:ORRF) shareholders might have a reason to worry after multiple insiders sold their shares over the last year. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
See our latest analysis for Orrstown Financial Services
In the last twelve months, the biggest single sale by an insider was when the President, Thomas Quinn, sold US$333k worth of shares at a price of US$23.09 per share. So what is clear is that an insider saw fit to sell at around the current price of US$22.45. 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 9.10k shares worth US$212k. On the other hand they divested 26.33k shares, for US$607k. Over the last year we saw more insider selling of Orrstown Financial Services shares, than buying. They sold for an average price of about US$23.07. It's not ideal to see that insiders have sold at around the current price. While some insiders have decided to take some money off the table, we wouldn't put too much weight on this fact. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
We've only seen a tiny insider purchase valued at US$2.5k, in the last three months. Overall, we don't think these recent trades are particularly informative, one way or the other.
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 5.4% of Orrstown Financial Services shares, worth about US$13m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
We note a that there has been a bit of insider buying recently (but no selling). That said, the purchases were not large. Our analysis of Orrstown Financial Services insider transactions leaves us cautious. But it's good to see that insiders own shares in the company. 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. Case in point: We've spotted 3 warning signs for Orrstown Financial Services you should be aware of.
But note: Orrstown Financial Services 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 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.