We wouldn't blame Popular, Inc. (NASDAQ:BPOP) shareholders if they were a little worried about the fact that Luis Cestero, the Executive Vice President of Retail & Business Solutions Group at Banco Popular de Puerto Rico recently netted about US$1.5m selling shares at an average price of US$176. That's a big disposal, and it decreased their holding size by 35%, which is notable but not too bad.

The Last 12 Months Of Insider Transactions At Popular

Over the last year, we can see that the biggest insider sale was by the Independent Director, Alejandro Ballester, for US$3.5m worth of shares, at about US$150 per share. That means that an insider was selling shares at slightly below the current price (US$174). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 40% of Alejandro Ballester's holding.

Insiders in Popular didn't buy any shares in the last year. 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!

I will like Popular better if I see some big insider buys.

Does Popular Boast High 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Popular insiders own about US$259m worth of shares (which is 2.3% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Popular Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. But since Popular is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 1 warning sign with Popular and understanding it should be part of your investment process.

But note: Popular may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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 of direct interests only, but not derivative transactions or indirect interests.

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.