Read This Before Buying Discover Financial Services Stock (NYSE: DFS)
We often see insiders buying stocks in companies that perform well over the long term. Unfortunately, there are also many examples of a sharp drop in stock prices after insiders sell stocks. So before you buy or sell Discover financial services (NYSE: DFS), you might want to know if any insiders have bought or sold.
Are Insider Trading Important?
It is perfectly legal for company insiders, including board members, to buy and sell shares in a company. However, there are rules governing insider trading and certain disclosures are required.
We don’t believe shareholders should just follow insider trading. But we also consider it foolish to ignore insider trading altogether. For example, a Columbia University study found that “insiders are more likely to engage in open market purchases of their own company’s shares when the company is about to reveal new deals.” with customers and suppliers ”.
The last 12 months of insider trading at Discover Financial Services
Executive Vice President and President of Payment Services Diane Offereins had the biggest insider sale in the past 12 months. This one-time transaction involved $ 2.3 million of shares at a price of $ 90.71 each. This means that even when the share price was below the current price of US $ 99.79, an insider wanted to cash in some shares. We generally consider it negative if insiders have sold, especially if they have sold below the current price, as this implies that they consider a lower price to be reasonable. Please note, however, that sellers can have a variety of reasons for selling, so we are not sure what they think about the stock price. This unique sale only represented 17% of Diane Offereins’ participation.
Overall, insiders have sold more shares of Discover Financial Services than they have bought in the past year. You can see a visual representation of insider trading (by businesses and individuals) over the past 12 months, below. By clicking on the chart below, you can see the exact details of each insider trade!
NYSE: DFS Insider Trading Volume April 14, 2021
If you like buying stocks that insiders buy rather than selling them, you might like this free list of companies. (Hint: some insiders bought them).
Discover Financial Services insiders sold shares recently
Over the past three months, we’ve seen some significant insider selling at Discover Financial Services. In total, insiders sold $ 5.5 million worth of shares during this period, and we did not record any purchases. All in all, that makes us a little cautious, but that’s not the end of everything.
Does Discover Financial Services claim strong insider ownership?
Another way to test the alignment between a company’s executives and other shareholders is to look at how many shares they own. I think it’s a good sign if there are insiders who own a significant number of shares in the company. Discover Financial Services insiders own 0.4% of the company, which is currently worth around $ 116 million based on the recent share price. This type of meaningful insider ownership generally increases the chances that the company will be run in the best interests of all shareholders.
So what do Discover Financial Services insider trading indicate?
Insiders recently sold stocks, but they haven’t bought. By zooming out, the longer term image doesn’t give us much comfort. It’s good to see strong insider ownership, but insider selling leaves us cautious. While we love to know what’s going on with insider ownership and trading, we also make sure to consider the risks a stock faces before making an investment decision. Concrete example: we have spotted 3 warning signs for Discover Financial Services you have to be aware of it.
Of course, you might find a fantastic investment looking elsewhere. So take a look at this free list of interesting companies.
For the purposes of this article, insiders are the people who report their transactions to the relevant regulatory body. We currently account for open market transactions and private assignments, but not derivative transactions.
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