Don't Ignore The Insider Selling In ABB

We wouldn't blame ABB Ltd (VTX:ABBN) shareholders if they were a little worried about the fact that Timo Ihamuotila, the Chief Financial Officer recently netted about CHF1.0m selling shares at an average price of CHF49.36. That sale reduced their total holding by 12% which is hardly insignificant, but far from the worst we've seen.

See our latest analysis for ABB

The Last 12 Months Of Insider Transactions At ABB

The Independent Chairman of the Board, Peter Voser, made the biggest insider sale in the last 12 months. That single transaction was for CHF1.7m worth of shares at a price of CHF48.09 each. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of CHF48.75. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 15% of Peter Voser's stake.

ABB insiders didn't buy any shares over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. ABB insiders own about CHF86m worth of shares. That equates to 0.1% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About ABB Insiders?

Insiders haven't bought ABB stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that ABB has 1 warning sign and it would be unwise to ignore this.

But note: ABB may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.