International Business

Who Has Been Buying International Business Machines Corporation (NYSE:IBM) Shares?

We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in International Business Machines Corporation (NYSE:IBM).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.

See our latest analysis for International Business Machines

The Last 12 Months Of Insider Transactions At International Business Machines

The insider Frederick McNabb made the biggest insider purchase in the last 12 months. That single transaction was for US$999k worth of shares at a price of US$108 each. Even though the purchase was made at a significantly lower price than the recent price (US$145), we still think insider buying is a positive. Because the shares were purchased at a lower price, this particular buy doesn’t tell us much about how insiders feel about the current share price.

In the last twelve months insiders purchased 25.70k shares for US$2.9m. But they sold 7.00k shares for US$899k. In total, International Business Machines insiders bought more than they sold over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

NYSE:IBM Insider Trading Volume May 17th 2021

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Does International Business Machines Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that International Business Machines insiders own 0.1% of the company, worth about US$172m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At International Business Machines Tell Us?

The fact that there have been no International Business Machines insider transactions recently certainly doesn’t bother us. However, our analysis of transactions over the last year is heartening. It would be great to see more insider buying, but overall it seems like International Business Machines insiders are reasonably well aligned (owning significant chunk of the company’s shares) and optimistic for the future. 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. Case in point: We’ve spotted 4 warning signs for International Business Machines you should be aware of.

But note: International Business Machines 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. 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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