Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Capitol Federal Financial, Inc. (NASDAQ:CFFN), it sends a favourable message to the company's shareholders.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

The Last 12 Months Of Insider Transactions At Capitol Federal Financial

In the last twelve months, the biggest single purchase by an insider was when Independent Director James Morris bought US$106k worth of shares at a price of US$5.07 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$5.80. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

In the last twelve months Capitol Federal Financial insiders were buying shares, but not selling. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Capitol Federal Financial Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Capitol Federal Financial. Independent Director Jeffrey Johnson spent US$51k on stock, and there wasn't any selling. This makes one think the business has some good points.

Insider Ownership Of Capitol Federal Financial

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 2.3% of Capitol Federal Financial shares, worth about US$17m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Capitol Federal Financial Tell Us?

It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Capitol Federal Financial insiders are well aligned, and that they may think the share price is too low. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Capitol Federal Financial. To that end, you should learn about the 2 warning signs we've spotted with Capitol Federal Financial (including 1 which can't be ignored).

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have 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 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com