How Insiders and Institutions are Trading Microsoft Corporation (MSFT)

Recent insider trends for Microsoft Corporation (NASDAQ:MSFT) have caught the attention of investors. Insider activity is often a strong indicator of future performance in a stock, and if the data on MSFT is anything to go by, investors should pay attention.

Institutions own 73.96% of Microsoft Corporation (MSFT)’s shares. The total value of these holdings, in millions, is $523,885. Among active positions in the latest quarter, 1,219 holders increased their positions by a total of 173.05 million shares, 1,336 holders decreased the positions by a total of 197.77 million shares, and 186 holders held their positions. This works out to a net decrease in ownership of 24.73 million shares, and suggests that institutions are feeling bearish about the stock.

Among new and sold out positions, 267 holders initiated new positions by a total of 35.04 million shares and 48 holders exited their positions by a total of 20.08 million shares. This nets out to an increase of 14.96 million shares and is a bullish sign for MSFT.

In the last three months, insiders executed a total of 18 trades. 12 of these were buys and 6 were sells. Insider ownership decreased by a total of 56111 shares, which suggests that MSFT’s key executives are feeling less optimistic about the outlook for the stock. The data from the past twelve months tells a similar story: insiders executed 31 buys and 71 sells, and ownership decreased by a net of 26.88 million shares.

Short interest, or the number of a stock’s tradable shares currently being shorted, is another metric investors use to get a pulse on sentiment. Microsoft Corporation (NASDAQ:MSFT)’s short interest is 49.56 million shares, or 0.65% of the float. This represents an increase of 21% in the number of shares being shorted compared to the previous reading, and implies that investors felt more pessimistic about the stock during the past two weeks.

Given what the insider ownership patterns are saying, it makes sense to consider the technicals to see if these pieces of information reach the same conclusion about the outlook for MSFT. A composite of 13 technical indicators that includes measures such as moving averages and momentum oscillators suggests that MSFT is a Strong buy, which implies that MSFT is expected to outperform the market based on prior trading patterns.

Conclusion

Institutional ownership trends suggest that the stock is cheap and the insider trading data indicates that insiders are bearish. Technical indicators (also) suggest that Microsoft Corporation (NASDAQ:MSFT) is undervalued.

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