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We often see insiders buying up shares in companies that perform well over the long term. 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 before you buy or sell Synchrony Financial (NYSE:SYF), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Synchrony Financial Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Director Roy Guthrie for US$295k worth of shares, at about US$29.53 per share. So it’s clear an insider wanted to buy, at around the current price. 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.
In the last twelve months insiders paid US$753k for 25.50k shares purchased. Overall, Synchrony Financial insiders were net buyers last year. The average buy price was around US$29.54. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (US$31.75). You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Synchrony Financial Insiders Bought Stock Recently
We saw some Synchrony Financial insider buying shares in the last three months. Director Laurel Richie shelled out US$15k for shares in that time. It’s great to see that insiders are only buying, not selling. However, in this case the amount invested recently is quite small.
Insider Ownership of Synchrony Financial
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. Insiders own 0.1% of Synchrony Financial shares, worth about US$28m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Synchrony Financial Insider Transactions Indicate?
We note a that there has been a tad more insider buying than selling, recently. But overall the difference isn’t worth writing home about. However, our analysis of transactions over the last year is heartening. Insiders own shares in Synchrony Financial and we see no evidence to suggest they are worried about the future. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Synchrony Financial.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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 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. On rare occasion, data errors may occur. Thank you for reading.