Last year, many McDonald's Co., Ltd. (NYSE:MCD) insiders sold a significant amount of their shares 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, the logic is that they should pay some attention to whether insiders are buying or selling stock. .
Check out our latest analysis for McDonald's.
McDonald's insider transactions over the past year
The biggest sale by an insider in the last twelve months was when Managing Director Christopher Kempczinski sold US$1.6m worth of shares at a price of US$280 per share. So it's clear that the insider wanted to take cash off the table, even if it was below his current price of $297. If an insider sold below the current price, it suggests they thought the downside was fair. With that in mind, I'm curious as to what they think about the recent (higher) valuation. However, sellers may sell for a variety of reasons, so we don't know exactly what they think about the stock price. Note that the single largest sale was just his 16% of Christopher Kempczinski's holdings.
After all, insiders sold more McDonald's shares than they bought in the last year. You can see a visual representation of the insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, click on the chart below.
If you're like me, you will. do not have I want to miss this free A list of growing companies that insiders are buying.
McDonald's insiders are selling stock
Over the past three months, McDonald's has seen significant insider selling. Specifically, insiders offloaded US$1.4m worth of shares at the time, and the company recorded no purchases at all. This could suggest that some insiders think the share price is not cheap.
McDonald's Insider Ownership
Another way to test the alignment between a company's leaders and other shareholders is to look at the number of shares they own. We generally like to see fairly high levels of insider ownership. McDonald's insiders own approximately $241m worth of shares, representing 0.1% of the company. This type of significant ownership by insiders generally increases the likelihood that the company is run in the interests of all shareholders.
So what does this data suggest about McDonald's insiders?
Insiders recently sold, but did not buy, McDonald's stock. Zooming out, the long-term outlook is less reassuring. But it's good to see McDonald's growing its profits. It's true that insiders own a large number of shares in the company (and that's good), but just analyzing their transactions doesn't give us confidence in the company. So while these insider transactions can help us form a theory about the stock, it's also worth knowing what risks this company faces.For example, McDonald's two warning signs I think you should know.
However, please note: McDonald's may not be the best stock to buy.So take a look at this free List of interesting companies with high ROE and low debt.
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 using only unbiased methodologies, based on historical data and analyst forecasts, 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.
