We wouldn't blame Provident Financial Services, Inc. (NYSE:PFS) shareholders if they were a little worried about the fact that Edward Leppert, the Independent Director recently netted about US$1.4m selling shares at an average price of US$20.63. That sale reduced their total holding by 46% which is hardly insignificant, but far from the worst we've seen.

Provident Financial Services Insider Transactions Over The Last Year

Notably, that recent sale by Edward Leppert is the biggest insider sale of Provident Financial Services shares that we've seen in the last year. That means that an insider was selling shares at slightly below the current price (US$21.33). 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 46% of Edward Leppert's holding.

Happily, we note that in the last year insiders paid US$31k for 1.96k shares. But insiders sold 126.70k shares worth US$2.6m. All up, insiders sold more shares in Provident Financial Services than they bought, over the last year. 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!

I will like Provident Financial Services better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Provident Financial Services insiders own about US$92m worth of shares. That equates to 3.3% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Provident Financial Services Tell Us?

Insiders haven't bought Provident Financial Services stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, Provident Financial Services has 5 warning signs (and 1 which is potentially serious) we think you should know about.

But note: Provident Financial Services 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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