Insiders At Otis Worldwide Sold US$3.4m In Stock, Alluding To Potential Weakness

Simply Wall St · 10/15 10:15

Many Otis Worldwide Corporation (NYSE:OTIS) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. 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.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Otis Worldwide

The Last 12 Months Of Insider Transactions At Otis Worldwide

Over the last year, we can see that the biggest insider sale was by the Executive VP & Chief Product, Peiming Zheng, for US$1.6m worth of shares, at about US$93.69 per share. That means that an insider was selling shares at slightly below the current price (US$105). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was 52% of Peiming Zheng's holding.

Otis Worldwide 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
NYSE:OTIS Insider Trading Volume October 15th 2024

I will like Otis Worldwide better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Otis Worldwide insiders own 0.1% of the company, worth about US$47m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Otis Worldwide Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Otis Worldwide shares in the last quarter. We don't take much encouragement from the transactions by Otis Worldwide insiders. But we do like the fact that insiders own a fair chunk of the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 3 warning signs for Otis Worldwide (2 shouldn't be ignored!) and we strongly recommend you look at these before investing.

But note: Otis Worldwide 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 of direct interests only, but not derivative transactions or indirect interests.