Own CBA shares? Your CEO just sold almost $1m worth of shares

Is this insider selling something for shareholders to be concerned about?

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Insider buying is often regarded as a bullish indicator. This is because few people should know a company better than its own directors. So, 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 indicator as you'd be unlikely to sell shares if you felt they were about to increase in value.

With that in mind, should you be concerned about the CEO of Commonwealth Bank of Australia (ASX: CBA) selling a large number of the bank's shares? Let's see what's happening.

CBA CEO sells shares

According to a change of director's interest notice, the bank's CEO, Matt Comyn, has been selling shares this week.

Comyn sold a total of 9,918 CBA shares through an on-market trade on Monday 16 October. He received an average of $100.55 per share, which equates to a total consideration of $997,254.90.

However, it is worth noting that Comyn still has a significant interest after this sale. This includes 95,480 CBA shares held directly and indirectly, as well as an equally large number of rights and restricted shares.

As a result, it's fair to say that the bank's CEO has interests that remain firmly aligned with shareholders.

Should you buy shares?

Most brokers agree that CBA's shares are fully valued at current levels and have price targets lower than current levels.

However, the team at UBS is a little more upbeat than most and has a neutral rating and $105.00 price target. This implies a potential upside of almost 6% for investors.

In addition, the broker is forecasting a 4.8% dividend yield in FY 2024, which boosts the total potential return to almost 11%.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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