Community West Bancshares (NASDAQ:CWBC) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 16%, resulting in a US$57m rise in the company's market capitalisation, translating to a gain of 25% on their initial investment. Put another way, the original US$279.6k acquisition is now worth US$348.1k.

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.

The Last 12 Months Of Insider Transactions At Community West Bancshares

The Executive VP & Market Executive of Central Valley Community Bank, Anthony Ramos, made the biggest insider sale in the last 12 months. That single transaction was for US$251k worth of shares at a price of US$18.71 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$21.41. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 37% of Anthony Ramos's holding. Anthony Ramos was the only individual insider to sell shares in the last twelve months. Notably Anthony Ramos was also the biggest buyer, having purchased US$280k worth of shares.

Happily, we note that in the last year insiders paid US$280k for 16.26k shares. But they sold 13.40k shares for US$251k. In the last twelve months there was more buying than selling by Community West Bancshares insiders. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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).

Insiders At Community West Bancshares Have Bought Stock Recently

Over the last quarter, Community West Bancshares insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought US$280k worth of shares. This is a positive in our book as it implies some confidence.

Does Community West Bancshares Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Insiders own 8.7% of Community West Bancshares shares, worth about US$35m. 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 Community West Bancshares Tell Us?

It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. Given that insiders also own a fair bit of Community West Bancshares we think they are probably pretty confident of a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 2 warning signs for Community West Bancshares (1 can't be ignored!) that we believe deserve your full attention.

But note: Community West Bancshares 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