Some The Coca-Cola Company (NYSE:KO) Shareholders might be a little concerned that CEO James Robert Quincey recently sold $2.1 million worth of stock at $64.09 per share. However, it is crucial to note that they remain very invested in the title and that the sale only reduced their stake by 7.4%.
The last 12 months of insider trading at Coca-Cola
In the past twelve months, the largest single insider sale occurred when Executive Vice President and Chief Financial Officer John Murphy sold $3.3 million worth of stock at a price of $62.29. per share. Clearly, therefore, an insider wanted to take money off the table, even below the current price of US$64.17. We generally consider it negative if insiders sold, especially if they did below the current price, as this implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, this is only a weak signal. It should be noted that this sale represented only 28% of John Murphy’s stake.
Over the past year, we’ve seen more insider selling of Coca-Cola stock than buying. You can see a visual representation of insider trading (by companies and individuals) over the past 12 months, below. If you click on the chart, you can see all individual trades including stock price, individual and date!
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Does Coca-Cola boast of high insider ownership?
Many investors like to check how much a company is owned by insiders. I think it’s a good sign if insiders have a significant number of shares in the company. Coca-Cola insiders own about $1.8 billion in stock (or 0.7% of the company). This type of significant insider ownership generally increases the chances that the company will be run in the best interests of all shareholders.
What could insider trading at Coca-Cola tell us?
Insider selling has exceeded insider buying at Coca-Cola for the past three months. Despite some insider buying, the longer-term picture doesn’t make us much more positive. But since Coca-Cola is profitable and growing, that doesn’t worry us too much. Although insiders hold a lot of stock in the company (which is good), our analysis of their dealings does not give us confidence in the company. So these insider trades can help us build a thesis on the stock, but it’s also helpful to know the risks this company faces. In terms of investment risks, we have identified 1 warning sign with Coca-Cola and understanding it should be part of your investment process.
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For the purposes of this article, insiders are persons who report their transactions to the relevant regulatory body. We currently record open market transactions and private dispositions, but not derivative transactions.
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