Finance

Dissecting the Insider Trading Patterns of McDermott International, Inc. (MDR)

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

Institutions own 87.20% of McDermott International, Inc. (MDR)’s shares. The total value of these holdings, in millions, is $1,649. Among active positions in the latest quarter, 120 holders increased their positions by a total of 19.66 million shares, 103 holders decreased the positions by a total of 23.25 million shares, and 42 holders held their positions. This works out to a net decrease in ownership of 3.59 million shares, and suggests that institutions are feeling bearish about the stock.

Among new and sold out positions, 29 holders initiated new positions by a total of 3.53 million shares and 23 holders exited their positions by a total of 2.32 million shares. This nets out to an increase of 1.21 million shares and is a bullish sign for MDR.

In the last three months, insiders executed a total of 1 trades. 1 were sells. Insider ownership decreased by a total of 869 shares, which suggests that MDR’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 8 buys and 31 sells, and ownership decreased by a net of 887347 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. McDermott International, Inc. (NYSE:MDR)’s short interest is 22.83 million shares, or 9.58% of the float. This represents a decrease of -3% in the number of shares being shorted compared to the previous reading, and implies that investors felt less 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 MDR. A composite of 13 technical indicators that includes measures such as moving averages and momentum oscillators suggests that MDR is a sell, which implies that MDR is expected to underperform 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 McDermott International, Inc. (NYSE:MDR) is overvalued.

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