Insider trading carries with it a dirty reputation among the public, because it can become very unfair and even illegal if not done properly. However, legal domestic trading and insider ownership of shares can be two very important aspects to inform investors.
Why is it so important to monitor internal transactions in a company?
Insiders know how their company works best than anyone else. While they are restricted by law from trading on the basis of non-public information, they have the unique ability to access information such as company morale, rumors and business trends.
The fact that a company has a high proportion of shares purchased by insiders does not necessarily mean that they are highly bullish. Many companies pay their management in particular as shares in the corporation. These shares are sometimes locked for a fixed period of time. In addition, a company founder or CEO can hold a significant stake, pushing the overall level of internal ownership to very high levels. For example, Elon Musk alone holds more than 20% of Tesla's shares.
Overall, it is a good indicator that a company has a high shareholding in insiders. This is a sign that they believe the price will continue to rise. However, such companies have less market depth and fewer publicly available trading stocks to make available. Low supply can trigger much stronger movements if demand is boosted by reports or other catalyst.
Here are the 16 companies in the S & P500 that have the highest shares of insider ownership:
1. Wells Fargo - 77.8%
2. Loews Corporation - 69.6%
3. Metlife - 61.8%
4. Rollins - 57.0%
5. Hormel Floods - 48.2%
6. News Corp - 39.4%
7. Urban Outfitters - 37.7%
8. Fox Corp - 35.3%
9. Oracle Corporation - 34.8%
10. Charter Communications - 28.0%
11. Morgan Stanley - 23.6%
12. Regeneron Pharmaceuticals - 19.4%
13. Kellogg Company - 18.6%
14. Walgreens Boots Alliance - 16.1%
15. Under Armour - 15.5%
16. IPG Photonics Corporation - 14.8%
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