International Business Machines Insiders Sold US$2.6m Of Shares Suggesting Hesitancy

Over the past year, many International Business Machines Corporation (NYSE:IBM) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for International Business Machines

The Last 12 Months Of Insider Transactions At International Business Machines

In the last twelve months, the biggest single sale by an insider was when the insider, Michelle Browdy, sold US$1.8m worth of shares at a price of US$185 per share. That means that an insider was selling shares at slightly below the current price (US$229). 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. 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. It is worth noting that this sale was only 7.6% of Michelle Browdy's holding.

In total, International Business Machines insiders sold more than they bought 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!

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Insiders At International Business Machines Have Sold Stock Recently

There was substantially more insider selling, than buying, of International Business Machines shares over the last three months. In that time, Senior VP & Chief Human Resources Officer Nickle LaMoreaux dumped US$775k worth of shares. On the flip side, insider Alfred Zollar spent US$197k on purchasing shares (as mentioned above) . Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Insider Ownership

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. We usually like to see fairly high levels of insider ownership. International Business Machines insiders own about US$204m worth of shares (which is 0.1% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At International Business Machines Tell Us?

The insider sales have outweighed the insider buying, at International Business Machines, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. It is good to see high insider ownership, but the insider selling leaves us cautious. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we found 3 warning signs for International Business Machines that deserve your attention before buying any shares.

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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.