Insiders At Walmart Sold US$29m In Stock, Alluding To Potential Weakness

The fact that multiple Walmart Inc. (NYSE:WMT) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Walmart

Walmart Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Executive VP of Global Governance, Rachel Brand, sold US$3.0m worth of shares at a price of US$58.82 per share. That means that even when the share price was below the current price of US$93.51, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. 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 only 32% of Rachel Brand's holding.

Over the last year we saw more insider selling of Walmart shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Walmart Insiders Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at Walmart. In that time, insiders dumped US$7.9m worth of shares. On the other hand we note Director Robert Moritz bought US$500k worth of shares , as previously mentioned . Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Does Walmart Boast High 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. We usually like to see fairly high levels of insider ownership. Walmart insiders own 0.9% of the company, currently worth about US$6.6b based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Walmart Tell Us?

Unfortunately, there has been more insider selling of Walmart stock, than buying, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since Walmart is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 1 warning sign for Walmart you should know about.

Of course Walmart may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.