While Enterprise Bancorp, Inc. (NASDAQ:EBTC) shareholders have had a good week with the stock up 20%, they shouldn't let their guards down. Although prices were relatively low, insiders chose to sell US$3.0m worth of stock in the past 12 months. This could be a sign of impending weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Enterprise Bancorp Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Independent Director, Kenneth Ansin, sold US$3.0m worth of shares at a price of US$25.25 per share. That means that an insider was selling shares at slightly below the current price (US$28.53). 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. This single sale was just 10% of Kenneth Ansin's stake.

Happily, we note that in the last year insiders paid US$175k for 6.28k shares. But they sold 120.00k shares for US$3.0m. In total, Enterprise Bancorp insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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

Does Enterprise Bancorp Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It appears that Enterprise Bancorp insiders own 24% of the company, worth about US$83m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Enterprise Bancorp Tell Us?

It doesn't really mean much that no insider has traded Enterprise Bancorp shares in the last quarter. We don't take much encouragement from the transactions by Enterprise Bancorp insiders. But it's good to see that insiders own shares in the company. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free.

But note: Enterprise Bancorp 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.

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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