Insiders Who Sold US$3.6m Of MicroStrategy Made The Right Call

While MicroStrategy Incorporated (NASDAQ:MSTR) shareholders have enjoyed a good week with stock up 25%, they need remain vigilant. Even though stock prices were relatively low, insiders elected to sell US$3.6m worth of stock in the last year, which could indicate some expected downturn.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for MicroStrategy

MicroStrategy Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Senior EVP & CFO, Andrew Kang, sold US$1.5m worth of shares at a price of US$260 per share. That means that an insider was selling shares at slightly below the current price (US$379). 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 32% of Andrew Kang's holding.

MicroStrategy insiders didn't buy any shares over the last year. 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!

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

Insiders At MicroStrategy Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at MicroStrategy. In total, Senior EVP & CFO Andrew Kang sold US$1.5m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. MicroStrategy insiders own 8.2% of the company, currently worth about US$6.8b based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About MicroStrategy Insiders?

An insider sold MicroStrategy shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. 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. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example, MicroStrategy has 3 warning signs (and 1 which is a bit concerning) we think you should know about.

But note: MicroStrategy 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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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.