Have Microchip Technology Incorporated (NASDAQ:MCHP) Insiders Been Selling Their Stock?

By
Simply Wall St
Published
August 15, 2021
NasdaqGS:MCHP
Source: Shutterstock

We wouldn't blame Microchip Technology Incorporated (NASDAQ:MCHP) shareholders if they were a little worried about the fact that Stephen Drehobl, the Senior Vice President of MCU8 & MCU16 Business Units recently netted about US$525k selling shares at an average price of US$151. That sale reduced their total holding by 17% which is hardly insignificant, but far from the worst we've seen.

Check out our latest analysis for Microchip Technology

Microchip Technology Insider Transactions Over The Last Year

In fact, the recent sale by Stephen Drehobl was the biggest sale of Microchip Technology shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was slightly below the current price of US$152, 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. We note that the biggest single sale was only 17%of Stephen Drehobl's holding.

In the last year Microchip Technology insiders didn't buy any company stock. 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!

insider-trading-volume
NasdaqGS:MCHP Insider Trading Volume August 16th 2021

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

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It's great to see that Microchip Technology insiders own 2.0% of the company, worth about US$833m. 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 Microchip Technology Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. You'd be interested to know, that we found 5 warning signs for Microchip Technology and we suggest you have a look.

But note: Microchip Technology 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, but not derivative transactions.

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