While First Foundation Inc. (NYSE:FFWM) shareholders have enjoyed a good week with stock up 20%, they need remain vigilant. The fact that insiders chose to dispose of US$2.1m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for First Foundation

First Foundation Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the President of First Foundation Advisors & Director, John Hakopian, sold US$1.6m worth of shares at a price of US$9.34 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of US$6.69. So it may not shed much light on insider confidence at current levels.

Over the last year, we can see that insiders have bought 37.82k shares worth US$175k. But they sold 214.17k shares for US$2.1m. In total, First Foundation insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Does First Foundation Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that First Foundation insiders own 9.1% of the company, worth about US$34m. 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 First Foundation Insiders?

The fact that there have been no First Foundation insider transactions recently certainly doesn't bother us. Our analysis of First Foundation insider transactions leaves us cautious. The modest level of insider ownership is, at least, some comfort. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing First Foundation. In terms of investment risks, we've identified 1 warning sign with First Foundation and understanding it should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 of direct interests only, but not derivative transactions or indirect interests.

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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.