Many The Charles Schwab Corporation (NYSE:SCHW) insiders ditched their stock over the past year, which may be of interest to the company’s shareholders. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
Although we don’t think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
View our latest analysis for Charles Schwab
Charles Schwab Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Founder & Co-Chairman, Charles Schwab, for US$19m worth of shares, at about US$69.43 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$70.89. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. We note that the biggest single sale was only 0.2% of Charles Schwab’s holding.
All up, insiders sold more shares in Charles Schwab 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: insiders have been buying them).
Insiders At Charles Schwab Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at Charles Schwab. Specifically, Founder & Co-Chairman Charles Schwab ditched US$34m worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Does Charles Schwab Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Charles Schwab insiders own 6.2% of the company, currently worth about US$8.3b based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Charles Schwab Insiders?
An insider sold Charles Schwab shares recently, but they didn’t buy any. Zooming out, the longer term picture doesn’t give us much comfort. But since Charles Schwab is profitable and growing, we’re not too worried by this. The company boasts high insider ownership, but we’re a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. In terms of investment risks, we’ve identified 1 warning sign with Charles Schwab and understanding it should be part of your investment process.
But note: Charles Schwab 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, but not derivative transactions.
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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.
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