Last year, many International Business Machines Corporation (NYSE:IBM) insiders sold a significant stake in the company, which may have caught the attention of shareholders. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying than to know whether they are selling. Because the latter sends an ambiguous message. However, shareholders should look deeper if multiple insiders have been selling shares over a period of time.
While we are by no means saying that investors should base their decisions solely on the actions of a company’s directors, it logically follows that they should pay some attention to whether insiders are buying or selling stock. It turns out that there is.
Check out our latest analysis for International Business Machines.
International Business Machines insider trading over the past year
Over the last year, we can see that the biggest insider sale was by James Kavanaugh, Senior Vice President and Chief Financial Officer, for US$5.2m worth of shares (approximately US$134 per share). This means that insiders wanted to cash out some of their shares, even if the stock price was below the current price of $146. As a general rule, we consider it discouraging if insiders are selling below the current price, as it suggests they are happy with a lower valuation. However, sellers may sell for a variety of reasons, so we don’t know exactly what they think about the stock price. This single sale amounted to only 30% of James Kavanaugh’s stock.
International Business Machines insiders didn’t buy any shares in the last year. The chart below depicts insider transactions (by companies and individuals) over the past year. You can click on the graph below to see the exact details of each insider transaction.
If you like to buy stocks that insiders are buying, rather than selling, you might like this free List of companies. (Hint: Insiders are buying them).
Does International Business Machines boast high insider ownership?
If you are a common shareholder, it may be worth checking how many shares are held by company insiders. We generally like to see fairly high levels of insider ownership. Insiders own 0.07% of International Business Machines shares, worth approximately US$99m. This level of insider ownership is good, but far from particularly noticeable. That certainly suggests a reasonable degree of consistency.
So what does insider trading in international business machines tell us?
The fact that there haven’t been any recent insider transactions for International Business Machines certainly doesn’t bother us. Our analysis of International Business Machines’s insider transactions makes us cautious. But it’s good to see insiders own shares in the company. In addition to knowing about ongoing insider transactions, it is useful to identify the risks facing International Business Machines.Case in point: we discovered 4 warning signs for International Business Machines you should know.
of course International Business Machines may not be the best stock to buy.So you might want to see this free There are many high-quality companies here.
For the purposes of this article, insiders are individuals who report their transactions to the relevant regulatory body. The Company currently only accounts for open market transactions and private dispositions of direct profits, and does not account for derivative transactions or indirect profits.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.