Don't Ignore The Insider Selling In Microsoft

Explore Microsoft's Fair Values from the Community and select yours

We wouldn't blame Microsoft Corporation (NASDAQ:MSFT) shareholders if they were a little worried about the fact that Takeshi Numoto, the Executive VP & Chief Marketing Officer recently netted about US$2.6m selling shares at an average price of US$527. That's a big disposal, and it decreased their holding size by 11%, which is notable but not too bad.

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The Last 12 Months Of Insider Transactions At Microsoft

The President & Vice Chairman, Bradford Smith, made the biggest insider sale in the last 12 months. That single transaction was for US$35m worth of shares at a price of US$436 each. That means that an insider was selling shares at slightly below the current price (US$522). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 16% of Bradford Smith's holding.

Insiders in Microsoft didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Check out our latest analysis for Microsoft

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Insider Ownership Of Microsoft

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Microsoft insiders own 0.03% of the company, currently worth about US$1.2b based on the recent share price. 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 Does This Data Suggest About Microsoft Insiders?

Insiders sold Microsoft shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. On the plus side, Microsoft makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Microsoft. Every company has risks, and we've spotted 1 warning sign for Microsoft you should know about.

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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.