Don't Ignore The Insider Selling In Accenture

We wouldn't blame Accenture plc (NYSE:ACN) shareholders if they were a little worried about the fact that Ryoji Sekido, a company insider, recently netted about US$1.4m selling shares at an average price of US$245. Probably the most concerning element of the whole transaction is that the disposal amounted to 83% of their entire holding.

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The Last 12 Months Of Insider Transactions At Accenture

Notably, that recent sale by Ryoji Sekido is the biggest insider sale of Accenture shares that we've seen in the last year. That means that an insider was selling shares at below the current price (US$249). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was 83% of Ryoji Sekido's holding.

In the last year Accenture insiders didn't buy any company stock. 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!

Check out our latest analysis for Accenture

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Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 0.04% of Accenture shares, worth about US$64m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Accenture Insiders?

Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. On the plus side, Accenture makes money, and is growing profits. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd practice some caution before buying! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Accenture. In terms of investment risks, we've identified 1 warning sign with Accenture and understanding it should be part of your investment process.

But note: Accenture may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.

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