A particularly strong insider buying signal is what we call a "cluster-buy" where three or more different insiders make open market purchases within a short period of one another. At NewBridge Bancorp (NASDAQ:NBBC), 5 different insiders purchased 4,605 shares at an average price of $4.04/share, for a total of $18,588, with the most recent purchase on November 22, 2011.
Presumably the only reason an insider would take their hard-earned cash and use it to buy stock of their company in the open market, is that they expect to make money. So when multiple insiders all decide to make purchases around the same time, it could be a strong indication that the stock is undervalued. Below is a table summarizing the insider buys that make up this "cluster":
Alex A. Diffey Jr.
John F. Watts
Joseph H. Kinnarney
Julius S. Young Jr.
Ramsey K. Hamadi
EVP and CFO
The chart below shows the one year performance of NBBC shares, versus its 200 day moving average. Note that NBBC's low point in its 52 week range is $3.30 per share, with $5.50 as the 52 week high point — that compares with a last trade of $4.00, with shares currently trading up about 1% on the day.
NBBC operates in the Banking & Savings sector, among companies like Citigroup Inc (NYSE:C) trading lower by about 1.7%. Below is a three month price history chart comparing the stock performance of NBBC, versus C.
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