We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Discover Financial Services (NYSE:DFS), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Discover Financial Services
Over the last year, we can see that the biggest insider purchase was by CEO, President & Director Roger Hochschild for US$2.0m worth of shares, at about US$67.04 per share. That means that an insider was happy to buy shares at around the current price of US$77.20. That means they have been optimistic about the company in the past, though they may have changed their mind. 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 Discover Financial Services insider decided to buy shares at close to current prices. Roger Hochschild was the only individual insider to buy over the 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!
Discover Financial Services is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Discover Financial Services Insiders Bought Stock Recently
At Discover Financial Services,over the last quarter, we have observed quite a lot more insider buying than insider selling. We can see that Roger Hochschild paid US$2.0m for shares in the company. On the other hand, insiders netted US$879k by selling. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
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. It’s great to see that Discover Financial Services insiders own 0.4% of the company, worth about US$113m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At Discover Financial Services Tell Us?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Discover Financial Services insiders are well aligned, and quite possibly think the share price is too low. That’s what I like to see! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Discover Financial Services.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.