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A number of insiders bought Potbelly Corporation (NASDAQ:PBPB) stock last year, which is great news for shareholders

·3-min read

When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Potbelly Corporation's (NASDAQ:PBPB) instance, it's good news for shareholders.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Potbelly

Potbelly Insider Transactions Over The Last Year

Notably, that recent purchase by Robert Wright is the biggest insider purchase of Potbelly shares that we've seen in the last year. So it's clear an insider wanted to buy, at around the current price, which is US$5.80. That means they have been optimistic about the company in the past, though they may have changed their mind. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. In this case we're pleased to report that the insider purchases were made at close to current prices.

In the last twelve months Potbelly insiders were buying shares, but not selling. 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!

insider-trading-volume
insider-trading-volume

Potbelly is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Potbelly Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Potbelly. Not only was there no selling that we can see, but they collectively bought US$130k worth of shares. This makes one think the business has some good points.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Potbelly insiders own 18% of the company, worth about US$30m. 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 Potbelly Insiders?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. 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. 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. Every company has risks, and we've spotted 2 warning signs for Potbelly (of which 1 doesn't sit too well with us!) you should know about.

Of course Potbelly 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.

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.

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