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 shareholders might well want to know whether insiders have been buying or selling shares in Nicholas Financial, Inc. (NASDAQ:NICK).

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

Check out our latest analysis for Nicholas Financial

The Last 12 Months Of Insider Transactions At Nicholas Financial

The Independent Director Adam M. Peterson made the biggest insider purchase in the last 12 months. That single transaction was for US$735k worth of shares at a price of US$10.98 each. So it's clear an insider wanted to buy, at around the current price, which is US$11.13. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. Happily, the Nicholas Financial insiders decided to buy shares at close to current prices.

Nicholas Financial insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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

Insiders at Nicholas Financial Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Nicholas Financial. Overall, two insiders shelled out US$797k for shares in the company -- and none sold. That shows some optimism about the company's future.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. From looking at our data, insiders own US$1.9m worth of Nicholas Financial stock, about 2.2% of the company. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. We prefer to see high levels of insider ownership.