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The fact that multiple The Charles Schwab Corporation (NYSE:SCHW) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
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$10m worth of shares, at about US$76.40 per share. That means that even when the share price was below the current price of US$80.34, an insider wanted to cash in some shares. 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. 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. This single sale was just 0.6% of Charles Schwab's stake.
Happily, we note that in the last year insiders paid US$2.3m for 35.00k shares. But insiders sold 789.03k shares worth US$58m. In total, Charles Schwab insiders sold more 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. 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).
Charles Schwab Insiders Are Selling The Stock
The last three months saw significant insider selling at Charles Schwab. Specifically, insider Nigel Murtagh ditched US$1.0m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. Charles Schwab insiders own 1.4% of the company, currently worth about US$2.1b based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.