We wouldn't blame The Charles Schwab Corporation (NYSE:SCHW) shareholders if they were a little worried about the fact that Peter Morgan, the MD, General Counsel & Corporate Secretary recently netted about US$1.8m selling shares at an average price of US$72.23. Probably the most concerning element of the whole transaction is that the disposal amounted to 99% of their entire holding.
The Last 12 Months Of Insider Transactions At Charles Schwab
In the last twelve months, the biggest single sale by an insider was when the Founder & Co-Chairman, Charles Schwab, sold US$7.6m worth of shares at a price of US$64.72 per share. That means that an insider was selling shares at slightly below the current price (US$74.26). 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. 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. We note that the biggest single sale was only 0.5% of Charles Schwab's holding.
Over the last year we saw more insider selling of Charles Schwab shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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).
Does Charles Schwab Boast High 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. Charles Schwab insiders own 1.8% of the company, currently worth about US$2.4b 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.
What Might The Insider Transactions At Charles Schwab Tell Us?
Insiders haven't bought Charles Schwab stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. It is good to see high insider ownership, but the insider selling leaves us cautious. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that Charles Schwab has 1 warning sign and it would be unwise to ignore it.
Of course Charles Schwab may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.