Insiders sold US$3.7m worth of McDonald's Corporation (NYSE:MCD) stock last year, could be a warning sign to watch out for
Despite a 7.8% gain in McDonald's Corporation's (NYSE:MCD) stock price this week, shareholders shouldn't let up. Although prices were relatively low, insiders chose to sell US$3.7m worth of stock in the past 12 months. This could be a sign of impending weakness.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for McDonald's
McDonald's Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Executive VP & CFO, Ian Borden, sold US$2.0m worth of shares at a price of US$256 per share. That means that even when the share price was below the current price of US$275, an insider wanted to cash in some shares. 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. This single sale was 53% of Ian Borden's stake.
Over the last year we saw more insider selling of McDonald's shares, than buying. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. McDonald's insiders own 0.09% of the company, currently worth about US$190m based on the recent share price. 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 McDonald's Tell Us?
The fact that there have been no McDonald's insider transactions recently certainly doesn't bother us. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of McDonald's insider transactions don't fill us with confidence. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing McDonald's. You'd be interested to know, that we found 1 warning sign for McDonald's and we suggest you have a look.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
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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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