Insiders At Standard Chartered Sold US$12m In Stock, Alluding To Potential Weakness

In the last year, many Standard Chartered PLC (LON:STAN) insiders sold a substantial stake in the company which may have sparked shareholders' attention. 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.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Standard Chartered

The Last 12 Months Of Insider Transactions At Standard Chartered

Over the last year, we can see that the biggest insider sale was by the insider, Simon Cooper, for UK£9.6m worth of shares, at about UK£6.50 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of UK£8.38. 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. We note that the biggest single sale was 98% of Simon Cooper's holding. Notably Simon Cooper was also the biggest buyer, having purchased UK£1.6m worth of shares.

Happily, we note that in the last year insiders paid UK£1.6m for 245.36k shares. But they sold 1.73m shares for UK£12m. Over the last year we saw more insider selling of Standard Chartered shares, than buying. You can see the insider transactions (by companies and 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!

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

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. Standard Chartered insiders own about UK£35m worth of shares. That equates to 0.2% of the company. 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?

The fact that there have been no Standard Chartered insider transactions recently certainly doesn't bother us. Still, the insider transactions at Standard Chartered in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - Standard Chartered has 1 warning sign we think you should be aware of.

But note: Standard Chartered 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 of direct interests only, but not derivative transactions or indirect interests.

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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.