We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Discover Financial Services (NYSE:DFS).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.’
Discover Financial Services Insider Transactions Over The Last Year
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 implies that an insider found the current (approximate) price enticing. Of course they may have changed their mind. But this suggests they are optimistic. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then. Roger Hochschild was the only individual insider to buy over the year.
The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Discover Financial Services Have Bought Stock Recently
Over the last three months, we’ve seen significantly more insider buying, than insider selling, at Discover Financial Services. Roger Hochschild spent US$2.0m on stock. On the other hand, insiders netted US$879k by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Discover Financial Services insiders own 0.8% of the company, worth about US$183m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all 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. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Discover Financial Services. Looks promising! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Discover Financial Services.
Of course Discover Financial Services may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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.