Don't Ignore The Fact That This Insider Just Sold Some Shares In East West Bancorp, Inc. (NASDAQ:EWBC)

By
Simply Wall St
Published
November 12, 2020
NasdaqGS:EWBC

We note that the East West Bancorp, Inc. (NASDAQ:EWBC) Independent Director, Chi Husan Liu, recently sold US$95k worth of stock for US$44.50 per share. On the bright side, that's just a small sale and only reduced their holding by 8.8%.

See our latest analysis for East West Bancorp

The Last 12 Months Of Insider Transactions At East West Bancorp

The insider, Herman Li, made the biggest insider sale in the last 12 months. That single transaction was for US$306k worth of shares at a price of US$30.06 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$43.70. 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 28% of Herman Li's holding.

In the last year East West Bancorp insiders didn't buy any company stock. 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!

insider-trading-volume
NasdaqGS:EWBC Insider Trading Volume November 12th 2020

I will like East West Bancorp better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Does East West Bancorp Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 0.7% of East West Bancorp shares, worth about US$46m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The East West Bancorp Insider Transactions Indicate?

An insider sold East West Bancorp shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. While conducting our analysis, we found that East West Bancorp has 3 warning signs and it would be unwise to ignore these.

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.

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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. 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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