Insider buying is often regarded as a bullish indicator. This is because few people should know a company better than its own directors.
The theory is that if they have the confidence to buy shares, it could be a sign that things are going well and they expect them to appreciate in value.
Conversely, when directors sell shares, it is often regarded as a bearish signal. After all, you'd be unlikely to sell shares if you thought they were about to increase in value.
With that in mind, this morning Commonwealth Bank of Australia (ASX: CBA) revealed that an insider has been selling some of the banking giant's shares.
What did CBA announce?
According to a change of director's interest notice from this morning, CBA Chief Executive Officer (CEO), Matt Comyn, has been trimming down his holding this week.
The notice reveals that Mr Comyn sold a total of 13,520 shares through an on-market trade on Tuesday 15 March 2022. This represented 21.2% of Comyn's direct interest in the bank, reducing his direct holding down to 50,003 shares.
The leader of Australia's largest bank received an average of $103.40 per share, which equates to a total consideration of approximately $1.4 million.
Time to panic?
While the CBA share price has rallied hard and is trading within touching distance of its record high, it may be unwise to panic.
After all, Comyn still has a sizeable direct holding of CBA shares with a market value of ~$5.3 million. In addition, the CEO has a hefty indirect holding of 32,084 shares and countless performance rights that could vest in the coming years.
This, you could argue, means that the CEO's interests remain firmly aligned with shareholders' interests.
