Yahoo Finance As Live Oak Bancshares, Inc. (NYSE:LOB) drops to US$1.3b market cap, insiders might rethink their US$1.5m stock purchase earlier this year
Insiders who bought US$1.5m worth of Live Oak Bancshares, Inc.'s (NYSE:LOB) stock at an average buy price of US$61.86 over the last year may be disappointed by the recent 13% decrease in the stock. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth US$687k, which is not great.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
View our latest analysis for Live Oak Bancshares
Live Oak Bancshares Insider Transactions Over The Last Year
The Vice Chairman & Executive VP William Williams made the biggest insider purchase in the last 12 months. That single transaction was for US$1.0m worth of shares at a price of US$64.46 each. That means that even when the share price was higher than US$28.44 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months insiders purchased 24.15k shares for US$1.5m. But insiders sold 2.75k shares worth US$173k. In the last twelve months there was more buying than selling by Live Oak Bancshares insiders. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Live Oak Bancshares is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. 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's great to see that Live Oak Bancshares insiders own 25% of the company, worth about US$316m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At Live Oak Bancshares Tell Us?
There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. Judging from their transactions, and high insider ownership, Live Oak Bancshares insiders feel good about the company's future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that Live Oak Bancshares has 1 warning sign and it would be unwise to ignore this.
Of course Live Oak Bancshares may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
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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.
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