Insider buying can provide an investor with valuable clues about a stock’s potential. There are a number of reasons why insiders sell stock. But they only buy stock for one reason – they believe it is set to go up in value.
Here, we are going to highlight a large insider purchase at Charles Schwab Corp (SCHW:US). Charles Schwab provides wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The company serves individuals and institutional clients in the US, Puerto Rico, the UK, Hong Kong, Singapore, and Australia. It’s listed on the New York Stock Exchange and currently has a market capitalization of $104 billion.
Charles Schwab: Insider Buying
Form 4 filings show that on 4 February an Independent Director at Charles Schwab, Charles Ruffel, purchased 3,636 SCHW shares at a price of $54.08 per share. This purchase – which cost the insider $196,642 – boosted his holding by 67%.
This insider transaction is noteworthy for several reasons. Firstly, Charles Ruffel has significant experience within the financial industry and is extremely familiar with the company. He was Founder of Asset International and held the position of CEO from 1989 to 2010. He was also the Founder of private equity firm Kudu Investment Management. Between 2015 and 2018, he was a trustee of a number of Charles Schwab funds.
Secondly, Ruffel has increased his holding in the company by 67%. This is a sizeable increase which suggests he is confident in the company’s future prospects.
Strong Q4 Results
Charles Schwab beat analysts’ profit and revenue expectations in Q4 on the back of increased interest in investing and trading. Revenue was $4.18 billion against a consensus forecast of $4.11 billion while adjusted earnings of 74 cents per share beat expectations of 71 cents per share. Excluding the Ameritrade acquisition, 1.27 million new clients were added in the quarter.
“Producing record operating performance and closing the largest brokerage acquisition in history during the fourth quarter of 2020 was an extraordinary capstone to an extraordinary year,” commented CEO Walter Bettinger.
Given these strong results, we see the recent insider buying activity as bullish. It would suggest that the Independent Director believes there is more positive news to come in the future.