Independent Director Of Morgan Stanley Sold 26% Of Their Shares

We wouldn't blame Morgan Stanley (NYSE:MS) shareholders if they were a little worried about the fact that Stephen Luczo, the Independent Director recently netted about US$7.2m selling shares at an average price of US$119. That sale reduced their total holding by 26% which is hardly insignificant, but far from the worst we've seen.

Check out our latest analysis for Morgan Stanley

Morgan Stanley Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Executive Chairman, James Gorman, for US$21m worth of shares, at about US$105 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$121. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 26% of James Gorman's stake.

Morgan Stanley insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Does Morgan Stanley Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Morgan Stanley insiders own 0.2% of the company, worth about US$426m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Morgan Stanley Insider Transactions Indicate?

Insiders haven't bought Morgan Stanley stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. But since Morgan Stanley is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. 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 2 warning signs for Morgan Stanley you should know about.

But note: Morgan Stanley 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.

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