Don't Ignore The Insider Selling In East West Bancorp
Some East West Bancorp, Inc. (NASDAQ:EWBC) shareholders may be a little concerned to see that the Chairman, Dominic Ng, recently sold a substantial US$3.4m worth of stock at a price of US$114 per share. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 3.3%.
East West Bancorp Insider Transactions Over The Last Year
Notably, that recent sale by Dominic Ng is the biggest insider sale of East West Bancorp shares that we've seen in the last year. So we know that an insider sold shares at around the present share price of US$114. 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.
Insiders in East West Bancorp didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
View our latest analysis for East West Bancorp
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Insider Ownership Of East West Bancorp
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. East West Bancorp insiders own 0.9% of the company, currently worth about US$143m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The East West Bancorp Insider Transactions Indicate?
Insiders sold East West Bancorp shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. On the plus side, East West Bancorp makes money, and is growing profits. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 1 warning sign with East West Bancorp and understanding this should be part of your investment process.
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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.