From what we can see, insiders were net sellers in International Business Machines Corporation's (NYSE:IBM ) during the past 12 months. That is, insiders sold the stock in greater numbers than they purchased it.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At International Business Machines
In the last twelve months, the biggest single sale by an insider was when the insider, Robert Del Bene, sold US$445k worth of shares at a price of US$148 per share. That means that an insider was selling shares at below the current price (US$149). 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. It is worth noting that this sale was only 17% of Robert Del Bene's holding. Robert Del Bene was the only individual insider to sell over the last year.
In the last twelve months insiders purchased 1.08k shares for US$135k. But they sold 4.60k shares for US$668k. Robert Del Bene sold a total of 4.60k shares over the year at an average price of US$145. 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders At International Business Machines Have Sold Stock Recently
There was substantially more insider selling, than buying, of International Business Machines shares over the last three months. In total, insider Robert Del Bene sold US$445k worth of shares in that time. On the flip side, Independent Director David Farr spent US$125k on purchasing shares. Generally this level of net selling might be considered a bit bearish.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. International Business Machines insiders own about US$106m worth of shares (which is 0.08% of the company). 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 International Business Machines Insider Transactions Indicate?
The stark truth for International Business Machines is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To help with this, we've discovered 5 warning signs (1 shouldn't be ignored!) that you ought to be aware of before buying any shares in International Business Machines.
Of course International Business Machines may not be the best stock to buy. So you may wish to see this free collection of high quality 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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