If a corporate insider is spending a substantial sum of money on company stock, it’s often worth taking a closer look at the stock. Insiders are some of the most informed participants in the market, and their trades can provide valuable investment insights.
In this report, we are going to highlight an interesting insider purchase at Microsoft Corp (MSFT:US). Microsoft is a multinational technology company that operates in a number of industries. It is a major player in the business productivity space, as well as the cloud computing and gaming industries. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $2.3 trillion.
Microsoft Corp: Insider Buying
Our insider transaction data shows that in late January, board member Emma Walmsley picked up 3,300 MSFT shares at an average price of $303.26. This purchase cost the insider approximately $1 million and increased her holding to 8,686 shares.
This trading activity is worth highlighting for a couple of reasons.
Firstly, Ms. Walmsley – who is currently CEO of GlaxoSmithKline – has made well-timed purchases in the recent past. In March 2021, for example, she bought 4,300 shares at a price of $237 per share. Since then, the stock has risen as high as $350.
Secondly, her January purchases have increased the size of her holding by 61%. The fact that the insider has increased the size of her position by such a large percentage indicates that she sees a lot of value in the stock at present.
Excellent Q2 Results
Microsoft recently produced another excellent set of quarterly results.
For the second quarter of fiscal 2022, revenue came in at $51.7 billion, up 20% year on year. Meanwhile, diluted earnings per share amounted to $2.48, up 22% year on year. The EPS figure was comfortably above analysts’ forecast of $2.31.
The results showed that Microsoft continues to see very strong growth in its cloud computing division. Here, revenue from Azure and other cloud services was up 46%. They also showed that the company continues to generate a lot of cash flow. For the period, operating cash flow amounted to $14.5 billion, up 16% year on year.
Looking ahead, Microsoft advised that it expects revenue of $48.5 billion to $49.3 billion in the fiscal third quarter – above the consensus forecast of $48.2 billion. CFO Amy Hood also said that the company expects full-year operating margins to widen slightly.
In light of these strong results, we see the insider buying here as a bullish indicator.