Charter Communications Inc Stock (NASDAQ: CHTR) announced earnings on July 31 and blew away analyst estimates. If you’re an insider and were of the mind that the trend would continue, would you buy, sell or hold shares in the company you help run? In the case of Charter, the insiders have stepped up the selling activity. While this doesn’t mean the stock is going crater, it raises questions about the ability of the share price to hold its current level.
In the press release from the company announcing its earnings, the CEO and Chairman Tom Rutledge was quoted saying:
"Our ability to grow our services this year for new and existing customers, is a testament to our operating strategy, the quality of our products and our significant investment in systems and people over the last several years…We continue to perform in a difficult and disruptive environment, and all of us at Charter are proud of our work in serving the communities in which we operate."
The numbers reported certainly indicate a strong positioning for the company. However, since the report the company has had two insider sales of shares and has had three more in the last month. The insider ownership of 0.36% doesn’t provide much of an indication that management is aligned with the company’s objectives, but the activity by the President and COO John Bickham makes you think about the prospects of holding CHTR. On July 31, 2020, he sold 231,993 shares, reducing his holdings to a mere 31,130 shares. That’s a significant reduction at a time when the price is breaking out to new highs.
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Action to Take: CHTR is a potential short opportunity on a close below the $550 support on above average volume.
Speculators may want to consider a trade based on the price breaking the $550 support by the December option expiration. The 18 DEC 20 550/540 can be bought for around $2.50.