We would not blame Company Financial Services Corp (NASDAQ:EFSC) shareholders whether they were a little concerned that Richard Sanborn, the independent director, recently made about US$5.1 million net by selling shares at an average price of US$53.73. That’s a big sale and it reduced their holding size by 40%, which is notable, but not that bad.

View our latest analysis for Enterprise Financial Services

Insider transactions in corporate financial services in the past year

Interestingly, this recent sale by Richard Sanborn is the largest insider sale of Enterprise Financial Services shares we have seen in the past year. That means an insider sold shares below the current price (US$54.00). When an insider sells below the current price, it suggests that he considered that lower price to be fair. That makes us wonder what he thinks of the (higher) recent valuation. While insider selling is not a positive sign, we can’t be sure that it means that insiders think the shares are fully valued, so it is only a weak sign. It is worth noting that this sale was only 40% of Richard Sanborn’s holdings.

Richard Sanborn has sold 96.92k shares in the last 12 months at an average price of US$53.54. You can see the insider transactions (by companies and individuals) over the last year in the chart below. If you click on the chart, you can see all the individual transactions including the share price, the individual, and the date!

For those who like to search for hidden gems this free list of small-cap companies that have recently made insider purchases could be the answer.

Insider ownership

For an ordinary shareholder, it is worth checking how many shares are owned by company insiders. We usually like to see fairly high levels of insider ownership. Insiders own 4.1% of Enterprise Financial Services shares, worth about US$82 million. We have certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest that insiders and other shareholders are aligned.

What do insider transactions at Enterprise Financial Services indicate?

An insider hasn’t bought shares in Enterprise Financial Services in the last three months, but there has been some selling. And even looking at the last year, we haven’t seen any buying. Insiders own shares, but we’re still pretty cautious, given the sales history. So we’d only buy after careful consideration. In addition to knowing about insider transactions going on, it’s useful to identify the risks facing Enterprise Financial Services. Be aware that Enterprise Financial Services 2 warning signs in our investment analysisand 1 of them is worrying…

But watch out: Enterprise Financial Services may not be the best stock to buy. So take a look at this free list of interesting companies with high return on equity and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory authority. We currently only consider open market transactions and private disposals of direct interests, but not derivative transactions or indirect interests.

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This article from Simply Wall St is general in nature. We comment solely on historical data and analyst forecasts, using an objective methodology. Our articles are not intended as financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your objectives or financial situation. We aim to provide you with a long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in the shares mentioned.

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