Those following along with Medtronic plc (NYSE:MDT) will no doubt be intrigued by the recent purchase of shares by Richard Anderson, Independent Director of the company, who spent a stonking US$566k on stock at an average price of US$113. There's no denying a buy of that magnitude suggests conviction in a brighter future, although we do note that proportionally it only increased their holding by 5.1%.
The Last 12 Months Of Insider Transactions At Medtronic
Over the last year, we can see that the biggest insider sale was by the President & Director, Geoffrey Martha, for US$1.1m worth of shares, at about US$96.05 per share. That means that even when the share price was below the current price of US$112, 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. 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. This single sale was just 18% of Geoffrey Martha's stake.
Happily, we note that in the last year insiders paid US$2.8m for 30.90k shares. On the other hand they divested 29000 shares, for US$2.8m. Overall, Medtronic insiders were net buyers last year. You can see the insider transactions (by 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!
Medtronic is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Medtronic insiders own 0.1% of the company, worth about US$184m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Medtronic Tell Us?
It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest Medtronic insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Medtronic.
But note: Medtronic 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, but not derivative transactions.
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