Company insiders such as corporate executives and directors tend to have the most up-to-date information on their companies’ prospects. If they’re buying stock then it is generally a positive development.
Here, we are going to highlight an insider purchase at Microsoft Corp (MSFT:US). Microsoft develops, licenses, and supports software, services, devices, and solutions worldwide. It’s traded on the Nasdaq Stock Exchange and currently has a market capitalization of $1.7 trillion.
Microsoft Corp: Insider Buying
Form 4 filings show that on 10 March an Independent Director at Microsoft Corp, Emma Walmsley, purchased 4,300 MSFT shares at a price of $236.80 per share. This purchase cost the insider $1,000,000 and increased her holding by approximately 600%.
High Insider Score
This insider transaction stands out because it is the largest purchase from an insider at MSFT in several years. Our Insider Model views this purchase as very bullish.
Walmsley is highly regarded in the business world and currently holds the position of CEO at GlaxoSmithKline. Her purchase is large in monetary terms and also increases her holding by nearly six times, which suggests she is very confident that the share price will go up in the future.
Microsoft Cloud Drives Growth
Microsoft’s latest Q2 results were very strong, led by a significant increase in demand for Microsoft’s cloud offering. Commercial cloud revenue was $16.7 billion which was a 34% increase year on year. Revenue for the quarter was $43.1 billion which was up 17% on the prior year. Net income of $15.5 billion was up 33% and diluted EPS of $2.03 per share was up 34% on the year before.
The CEO Satya Nadella was optimistic about Microsoft’s outlook on the conference call post the results. “I’m energized by our increasing momentum, and the expanding opportunity fueled by the structural change brought about by the rapid adoption of digital technology. We are investing to meet these needs in the coming decade, and I am optimistic about what’s ahead,” he said.
On the back of these Q2 results we see the insider buying here as bullish. The sizeable increase in holding by the Independent Director suggests he is very positive about the future prospects of the company.