McDonald's Corporation (NYSE:MCD) insiders sold US$3.7m worth of stock, possibly signalling a downtrend
The fact that multiple McDonald's Corporation (NYSE:MCD) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, if numerous insiders are selling, shareholders should investigate more.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for McDonald's
McDonald's Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Executive VP & CFO, Ian Borden, for US$2.0m worth of shares, at about US$256 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$275. 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. We note that the biggest single sale was 53% of Ian Borden's holding.
Over the last year we saw more insider selling of McDonald's shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like McDonald's better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Are McDonald's Insiders Buying Or Selling?
We have seen a bit of insider selling at McDonald's, over the last three months. insider Anthony Capuano only netted US$8.7k selling shares, in that period. It's not great to see insider selling, nor the lack of recent buyers. But the selling simply isn't sufficiently substantial to be of much use as a signal.
Insider Ownership Of McDonald's
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. McDonald's insiders own 0.09% of the company, currently worth about US$191m based on the recent share price. 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 Does This Data Suggest About McDonald's Insiders?
We did not see any insider buying in the last three months, but we did see selling. But given the selling was modest, we're not worried. While we feel good about high insider ownership of McDonald's, we can't say the same about the selling of shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. You'd be interested to know, that we found 1 warning sign for McDonald's and we suggest you have a look.
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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