We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in LCNB Corp. (NASDAQ:LCNB).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
The Last 12 Months Of Insider Transactions At LCNB
In the last twelve months, the biggest single sale by an insider was when the Independent Director, William Huddle, sold US$59k worth of shares at a price of US$14.86 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$17.87. 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. We note that the biggest single sale was only 2.2% of William Huddle's holding. William Huddle was the only individual insider to sell over the last year.
Over the last year, we can see that insiders have bought 8.70k shares worth US$115k. But insiders sold 7.00k shares worth US$109k. In the last twelve months there was more buying than selling by LCNB insiders. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
LCNB Insiders Are Selling The Stock
The last three months saw some LCNB insider selling. Independent Director William Huddle sold US$27k worth of shares in that time. But US$7.6k was spent on buying, too, . While it's not great to see insider selling, the net amount sold isn't enough for us to want to read anything into it.
Does LCNB Boast High 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that LCNB insiders own 6.9% of the company, worth about US$16m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About LCNB Insiders?
We note that there's been a little more insider selling than buying, recently. But the difference is small, and thus, not concerning. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in LCNB and their transactions don't cause us concern. 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. Every company has risks, and we've spotted 1 warning sign for LCNB you should know about.
But note: LCNB 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, but not derivative transactions.
This article by Simply Wall St is general in nature. 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.
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