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It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Potbelly Corporation's (NASDAQ:PBPB) case, it's fantastic news for shareholders.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
Check out our latest analysis for Potbelly
Potbelly Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by insider David Nierenberg for US$70k worth of shares, at about US$9.24 per share. Even though the purchase was made at a significantly lower price than the recent price (US$10.49), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
While Potbelly insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders At Potbelly Have Bought Stock Recently
Over the last quarter, Potbelly insiders have spent a meaningful amount on shares. We can see that insider David Nierenberg paid US$115k for shares in the company. No-one sold. That shows some optimism about the company's future.
Insider Ownership Of Potbelly
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Potbelly insiders own about US$40m worth of shares. That equates to 13% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Potbelly Insiders?
It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Potbelly insiders are well aligned, and that they may think the share price is too low. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Potbelly. While conducting our analysis, we found that Potbelly has 2 warning signs and it would be unwise to ignore these.