Explore Oracle's Fair Values from the Community and select yours

In the last year, many Oracle Corporation (NYSE:ORCL) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

The Last 12 Months Of Insider Transactions At Oracle

The insider, Clay Magouyrk, made the biggest insider sale in the last 12 months. That single transaction was for US$3.2m worth of shares at a price of US$214 each. That means that even when the share price was below the current price of US$248, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 20% of Clay Magouyrk's holding.

Happily, we note that in the last year insiders paid US$1.1m for 5.98k shares. On the other hand they divested 41.34k shares, for US$8.8m. All up, insiders sold more shares in Oracle than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like Oracle better if I see some big insider buys.

Oracle Insiders Are Selling The Stock

We've seen more insider selling than insider buying at Oracle recently. In total, insiders sold US$8.1m worth of shares in that time. Meanwhile Independent Director Rona Fairhead bought US$112k worth. The share price has moved a bit recently, but it's hard to argue that the selling is a positive.

Insider Ownership Of Oracle

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. Oracle insiders own about US$285b worth of shares (which is 41% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Oracle Insider Transactions Indicate?

Unfortunately, there has been more insider selling of Oracle stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, Oracle makes money, and is growing profits. 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.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.

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.