Despite the fact that Microsoft Corporation (NASDAQ:MSFT) stock rose 3.9% last week, insiders who sold US$352m worth of stock in the previous 12 months are likely to be better off. Selling at an average price of US$332, which is higher than the current price might have been the right call as holding on to stock would have meant their investment would be worth less now than it was at the time of sale.
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.
Microsoft Insider Transactions Over The Last Year
The Chairman & CEO, Satya Nadella, made the biggest insider sale in the last 12 months. That single transaction was for US$285m worth of shares at a price of US$349 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$247. So it is hard to draw any strong conclusion from it.
All up, insiders sold more shares in Microsoft than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Microsoft Insiders Are Selling The Stock
The last three months saw significant insider selling at Microsoft. In total, insiders sold US$21m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Microsoft insiders own 0.04% of the company, worth about US$826m. 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 haven't bought Microsoft stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since Microsoft is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Microsoft. For example - Microsoft has 1 warning sign we think you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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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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