Otis Worldwide Insiders Sell US$4.3m Of Stock, Possibly Signalling Caution

Over the past year, many Otis Worldwide Corporation (NYSE:OTIS) insiders sold a significant stake in the company which may have piqued investors' interest. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Otis Worldwide

The Last 12 Months Of Insider Transactions At Otis Worldwide

In the last twelve months, the biggest single sale by an insider was when the Executive VP & Chief Product, Peiming Zheng, sold US$1.6m worth of shares at a price of US$93.69 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$96.20. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was 52% of Peiming Zheng's holding.

Insiders in Otis Worldwide didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

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Otis Worldwide Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Otis Worldwide shares. Specifically, Executive VP & Chief People Officer Abbe Luersman ditched US$909k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership Of Otis Worldwide

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Otis Worldwide insiders own about US$43m worth of shares. That equates to 0.1% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Otis Worldwide Tell Us?

An insider sold Otis Worldwide shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. But since Otis Worldwide is profitable and growing, we're not too worried by this. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Otis Worldwide. To that end, you should learn about the 3 warning signs we've spotted with Otis Worldwide (including 2 which are concerning).

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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.

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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.