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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in U.S. Bancorp (NYSE:USB).
Do Insider Transactions Matter?
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
U.S. Bancorp Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Leslie J. Godridge sold US$1.3m worth of shares at a price of US$54.99 per share. So what is clear is that an insider saw fit to sell at around the current price of US$50.55. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.
We note that in the last year insiders divested 164.99k shares for a total of US$8.9m. All up, insiders sold more shares in U.S. Bancorp than they bought, over the last year. They sold for an average price of about US$54.24. It’s not ideal to see that insiders have sold at around the current price. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. 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).
U.S. Bancorp Insiders Are Selling The Stock
The last three months saw significant insider selling at U.S. Bancorp. In total, insiders sold US$1.6m worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Does U.S. Bancorp Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It’s great to see that U.S. Bancorp insiders own 0.3% of the company, worth about US$218m. 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 U.S. Bancorp Tell Us?
Insiders haven’t bought U.S. Bancorp stock in the last three months, but there was some selling. And there weren’t any purchases to give us comfort, over the last year. But it is good to see that U.S. Bancorp is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. Of course, the future is what matters most. So if you are interested in U.S. Bancorp, you should check out this free report on analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.