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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 B. Riley Financial, Inc. (NASDAQ:RILY).
What Is Insider Buying?
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.'
B. Riley Financial Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the , Daniel Asher, for US$2.8m worth of shares, at about US$23.65 per share. So we know that an insider sold shares at around the present share price of US$21.13. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. 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 202k shares worth US$3.5m. On the other hand they divested 129k shares, for US$3.0m. In total, B. Riley Financial insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
B. Riley Financial is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
B. Riley Financial Insiders Bought Stock Recently
At B. Riley Financial,over the last quarter, we have observed quite a lot more insider buying than insider selling. Insiders spent US$1.3m on shares. But Chief Accounting Officer & Senior VP Howard Weitzman sold shares worth US$195k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Insider Ownership of B. Riley Financial
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. B. Riley Financial insiders own 33% of the company, currently worth about US$187m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The B. Riley Financial Insider Transactions Indicate?
The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest B. Riley Financial insiders are well aligned, and quite possibly think the share price is too low. Nice! Along with insider transactions, I recommend checking if B. Riley Financial is growing revenue. This free chart of historic revenue and earnings should make that easy.
But note: B. Riley Financial 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.