In This Article:
In the last year, many Berkshire Hathaway Inc. (NYSE:BRK.A) 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, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
Berkshire Hathaway Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Vice Chairman of Insurance Operations & Director, Ajit Jain, sold US$139m worth of shares at a price of US$695,418 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$778,833. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower 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. This single sale was 63% of Ajit Jain's stake.
Berkshire Hathaway insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
See our latest analysis for Berkshire Hathaway
I will like Berkshire Hathaway better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. Berkshire Hathaway insiders own about US$164b worth of shares (which is 15% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Berkshire Hathaway Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Berkshire Hathaway shares in the last quarter. While we feel good about high insider ownership of Berkshire Hathaway, we can't say the same about the selling of shares. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Berkshire Hathaway.