Microchip Technology Insiders Sold US$5.4m Of Shares Suggesting Hesitancy

Simply Wall St · 07/01 10:09

The fact that multiple Microchip Technology Incorporated (NASDAQ:MCHP) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Microchip Technology

The Last 12 Months Of Insider Transactions At Microchip Technology

Over the last year, we can see that the biggest insider sale was by the Executive Chair, Stephen Sanghi, for US$3.4m worth of shares, at about US$93.99 per share. So we know that an insider sold shares at around the present share price of US$91.50. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).

Insiders in Microchip Technology didn't buy any shares in the last year. 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!

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NasdaqGS:MCHP Insider Trading Volume July 1st 2024

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Microchip Technology Insiders Are Selling The Stock

The last three months saw significant insider selling at Microchip Technology. Specifically, insiders ditched US$1.8m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership Of Microchip Technology

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Microchip Technology insiders own 2.1% of the company, worth about US$1.0b. 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 Microchip Technology Tell Us?

Insiders sold Microchip Technology shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. While it's good to be aware of 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. At Simply Wall St, we found 2 warning signs for Microchip Technology that deserve your attention before buying any shares.

Of course Microchip Technology 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 of direct interests only, but not derivative transactions or indirect interests.