We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in Standard Chartered PLC (LON:STAN).
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
The Last 12 Months Of Insider Transactions At Standard Chartered
In the last twelve months, the biggest single purchase by an insider was when Group Chief Executive & Director William Winters bought UK£992k worth of shares at a price of UK£6.11 per share. That means that an insider was happy to buy shares at around the current price of UK£7.18. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. Happily, the Standard Chartered insiders decided to buy shares at close to current prices.
Happily, we note that in the last year insiders paid UK£2.4m for 386.51k shares. But they sold 50000 for UK£351k. In total, Standard Chartered insiders bought more than they sold over the last year. You can see the insider transactions (by 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 plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insider Ownership of Standard Chartered
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Standard Chartered insiders own 0.2% of the company, worth about UK£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.
So What Do The Standard Chartered Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Standard Chartered shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Standard Chartered and we see no evidence to suggest they are worried about the future. Of course, the future is what matters most. So if you are interested in Standard Chartered, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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