Have Preferred Bank Insiders Been Selling Stock?
We wouldn't blame Preferred Bank (NASDAQ:PFBC) shareholders if they were a little worried about the fact that Li Yu, the Chairman recently netted about US$899k selling shares at an average price of US$65.65. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 2.0%.
The Last 12 Months Of Insider Transactions At Preferred Bank
Over the last year, we can see that the biggest insider sale was by the Independent Director, Chih-Wei Wu, for US$1.2m worth of shares, at about US$82.73 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$95.94. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent 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 100% of Chih-Wei Wu's stake.
Over the last year we saw more insider selling of Preferred Bank shares, than buying. 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!
Check out our latest analysis for Preferred Bank
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).
Insider Ownership
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. Preferred Bank insiders own about US$94m worth of shares. That equates to 8.1% of the company. 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 Do The Preferred Bank Insider Transactions Indicate?
Unfortunately, there has been more insider selling of Preferred Bank stock, than buying, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Preferred Bank. For example - Preferred Bank has 1 warning sign we think you should be aware of.
But note: Preferred Bank 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.