Stock Analysis

There are Two Main Reasons why Disney's (NYSE:DIS) Insider Transactions are Disappointing

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There are a number of ways to analyze a company such as Walt Disney ( NYSE:DIS ), and picking the right approach is not always straight forward. When complexity overwhelms us, we tend to resort to short-term strategies and use mental shortcuts. One of these strategies is to follow what other investors are doing. In this article, we will focus on following the money of 2 investor groups: Insiders and institutions.

Keep in mind, that this is a weak strategy and investors should not use it as a standalone approach to decision-making. If you want to get a fuller picture of Disney's fundamentals, take a look at our Disney Report.

I mentioned that this is not a strong strategy, the reason for this is that people's and institution's motivations for making a market move may be external to what they think of the company. They may be engaging in a particular strategy - such as harvesting, rebalancing, cycling out of a sector (as opposed to abandoning a stock), selling a portion to de-risk a portfolio, etc.

Another reason investors should be cautious, is that there is some delay between the time a move is made, and the time someone reports that move with the SEC. That is why we look for consistent moves from insiders and institutions in order to infer that they are moving based on their inside knowledge for the company.

Before jumping in the money flow, we will make a rough fundamental overview of Disney:

  • Returns (ROE, ROCE, ROA) are less than 2%. This implies some difficulties extracting profits from past projects
  • Simply Wall St Analyst Mr. Bowman shows us why Disney will rebound with 37.5% earnings growth next year
  • Disney has a free cash flow problem, and has consistently experienced decreased free cash flows since Q2 2019
  • Debt levels seem manageable, with a 55% debt to equity ratio, but also holding US$16b in cash to offset the US$55.8b debt
  • A total dividend cut, leaving dividend investors questioning if the move is permanent or temporary

As you can see, Disney is a mixed bag on a fundamental basis, and we are now going to look at what some investors are doing, instead of saying.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Walt Disney

Walt Disney Insider Transactions Over The Last Year

The Executive Chairman of the Board, Robert Iger, made the biggest insider sale in the last 12 months. That single transaction was for US$99m worth of shares at a price close to US$180 each.

So it's clear an insider wanted to take some cash off the table, even slightly below the current price of US$180. It is worth noting that this sale was 47% of Robert Iger's direct holding.

Another revealing piece of information is that insiders in Walt Disney didn't buy any shares in the last year.

The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

NYSE:DIS Insider Trading Volume August 30th 2021

Walt Disney will be more consistent if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Does Walt Disney Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership.

Walt Disney insiders own about US$186m worth of shares (which is 0.06% of the company).

This kind of weak ownership level indicates the lack of incentives for management to run the company in the interests of shareholders.

Institutional Transactions

After insiders, we will look at what the larger holders have been doing with Disney stock. This will give us a better picture of what analysts in these large companies really think about the company and their future projects.

Institutional investors seem to be generally purchasing Disney stock. The most notable transactions were from Morgan Stanley, which seems to have cycled some stock from one of their holdings (30%) to another holding, where they increased their position by 376%.

A list of last periods transactions can be great to have for investors that have Disney on their radar.

Key Takeaways

Insiders sold Walt Disney shares recently, but they didn't buy any. This is a weak side strategy and can be resulting from factors other than their opinion on the stock. Investors can still benefit if they keep track of insider activity.

Insiders and management unfortunately hold a very small stake in their own company - 0.06%. This clearly splits the interests of management and shareholders. It seems that management has plenty of leeway to steer the company wherever they want, without a party to hold them accountable.

Even with the weak governance, institutions are still holding the company in positive regard!

So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Walt Disney has 2 warning signs (1 doesn't sit too well with us!) that deserve your attention before going any further with your analysis.

Of course, Walt Disney 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, but not derivative transactions.

What are the risks and opportunities for Walt Disney?

The Walt Disney Company, together with its subsidiaries, operates as an entertainment company worldwide.

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  • Trading at 24.3% below our estimate of its fair value

  • Earnings are forecast to grow 26.28% per year

  • Earnings grew by 58.5% over the past year


No risks detected for DIS from our risks checks.

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Simply Wall St analyst Goran Damchevski and Simply Wall St have no position in any of the companies mentioned. This article 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.

Goran Damchevski

Goran Damchevski

Goran is an Equity Analyst and Writer at Simply Wall St over 4 years of experience in financial analysis and company research. Personally, Goran has over 4 years of experience in financial analysis and company research, where he previously worked in a seed-stage startup as a capital markets research analyst and product lead and developed a financial data platform for equity investors. 


Walt Disney

The Walt Disney Company, together with its subsidiaries, operates as an entertainment company worldwide.

Proven track record with adequate balance sheet.