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Possible bearish signals as PepsiCo, Inc. (NASDAQ:PEP) insiders disposed of US$11m worth of stock

The fact that multiple PepsiCo, Inc. (NASDAQ:PEP) 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, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

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.

Check out our latest analysis for PepsiCo

PepsiCo Insider Transactions Over The Last Year

The Vice Chairman, Hugh Johnston, made the biggest insider sale in the last 12 months. That single transaction was for US$6.0m worth of shares at a price of US$161 each. That means that even when the share price was below the current price of US$169, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 20% of Hugh Johnston's stake.

PepsiCo insiders didn't buy any shares over the last year. You can see the insider transactions (by companies and 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!

insider-trading-volume
insider-trading-volume

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insiders At PepsiCo Have Sold Stock Recently

The last quarter saw substantial insider selling of PepsiCo shares. In total, insiders sold US$900k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

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. A high insider ownership often makes company leadership more mindful of shareholder interests. PepsiCo insiders own 0.1% of the company, currently worth about US$322m 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 PepsiCo Tell Us?

Insiders sold PepsiCo shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. But since PepsiCo is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. In terms of investment risks, we've identified 3 warning signs with PepsiCo and understanding these should be part of your investment process.

But note: PepsiCo 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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