We wouldn't blame Microsoft Corporation (NASDAQ:MSFT) shareholders if they were a little worried about the fact that Judson Althoff, a company insider, recently netted about US$18m selling shares at an average price of US$332. That sale reduced their total holding by 28% which is hardly insignificant, but far from the worst we've seen.
Microsoft Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Chairman & CEO, Satya Nadella, sold US$23m worth of shares at a price of US$305 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$336. 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. It is worth noting that this sale was only 4.6% of Satya Nadella's holding.
Over the last year we saw more insider selling of Microsoft shares, than buying. 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!
I will like Microsoft better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insider Ownership of Microsoft
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. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Microsoft insiders own 0.06% of the company, worth about US$1.5b. 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 Microsoft Insider Transactions Indicate?
Insiders sold Microsoft shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. But it is good to see that Microsoft is growing earnings. 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. While conducting our analysis, we found that Microsoft has 1 warning sign and it would be unwise to ignore this.
But note: Microsoft 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.
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.
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