Don't Ignore The Insider Selling In State Street

Some State Street Corporation (NYSE:STT) shareholders may be a little concerned to see that the Independent Director, Gregory Summe, recently sold a substantial US$1.4m worth of stock at a price of US$100.00 per share. That sale reduced their total holding by 12% which is hardly insignificant, but far from the worst we've seen.

View our latest analysis for State Street

State Street Insider Transactions Over The Last Year

Notably, that recent sale by Gregory Summe is the biggest insider sale of State Street shares that we've seen in the last year. So what is clear is that an insider saw fit to sell at around the current price of US$99.64. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. 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.

All up, insiders sold more shares in State Street than they bought, over the last year. The average sell price was around US$90.02. It's not particularly great to see insiders were selling shares at below recent prices. Of course, the sales could be motivated for a multitude of reasons, so we shouldn't jump to conclusions. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

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

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It's great to see that State Street insiders own 0.6% of the company, worth about US$165m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The State Street Insider Transactions Indicate?

Insiders sold State Street shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. But since State Street is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. 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. At Simply Wall St, we found 1 warning sign for State Street that deserve your attention before buying any shares.

But note: State Street 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.