Last week, Morgan Stanley's (NYSE:MS) stock jumped 3.5%, but insiders who sold US$14m worth of stock in over the past year are likely to be in a better position. Selling at an average price of US$102, which is higher than the current price, may have been the best move for these insiders because their investment would have been worth less now than when they sold.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Morgan Stanley
Over the last year, we can see that the biggest insider sale was by the insider, Eric Grossman, for US$3.4m worth of shares, at about US$102 per share. So what is clear is that an insider saw fit to sell at around the current price of US$93.07. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
Over the last year we saw more insider selling of Morgan Stanley shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
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. Morgan Stanley insiders own 0.3% of the company, currently worth about US$410m based on the recent share price. 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 Does This Data Suggest About Morgan Stanley Insiders?
The fact that there have been no Morgan Stanley insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Morgan Stanley, we can't say the same about the selling of shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 1 warning sign with Morgan Stanley and understanding it should be part of your investment process.
But note: Morgan Stanley 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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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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