We wouldn't blame Franklin Resources, Inc. (NYSE:BEN) shareholders if they were a little worried about the fact that Alok Sethi, the Executive Vice President of Technology & Operations recently netted about US$1.1m selling shares at an average price of US$27.09. Probably the most concerning element of the whole transaction is that the disposal amounted to 84% of their entire holding.
Franklin Resources Insider Transactions Over The Last Year
In fact, the recent sale by Alok Sethi was the biggest sale of Franklin Resources shares made by an insider individual in the last twelve months, according to our records. So what is clear is that an insider saw fit to sell at around the current price of US$26.47. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.
Alok Sethi divested 49.89k shares over the last 12 months at an average price of US$27.20. 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!
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Does Franklin Resources 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Franklin Resources insiders own 44% of the company, currently worth about US$5.7b 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.
So What Do The Franklin Resources Insider Transactions Indicate?
An insider sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Franklin Resources. In terms of investment risks, we've identified 4 warning signs with Franklin Resources and understanding these should be part of your investment process.
But note: Franklin Resources 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, but not derivative transactions.
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What are the risks and opportunities for Franklin Resources?
Price-To-Earnings ratio (17.6x) is below the Capital Markets industry average (27.9x)
Earnings are forecast to grow 4.88% per year
Profit margins (12%) are lower than last year (21.5%)
Large one-off items impacting financial results
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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