Unusual Options Trading Activity Surrounds Microsoft (NASDAQ:MSFT)

On Tuesday, Microsoft Co. (NASDAQ:MSFT - Get Free Report) experienced a significant surge in options trading activity. Investors purchased a total of 355,575 call options for the company. This marks a notable increase of 29% when compared to the average daily volume of 274,666 call options.

Recent Insider Transactions at Microsoft

In related news, Microsoft’s CEO, Satya Nadella, recently sold 14,398 shares of the company’s stock on August 23rd. The shares were sold at an average price of $417.41, amounting to a total value of approximately $6 million. After this sale, Nadella retains ownership of 786,933 shares, which are valued at over $328 million. This transaction reflected no change in his position percentage-wise.

Additionally, Microsoft insider Bradford L. Smith sold 40,000 shares on September 9th at an average price of $402.59, totaling approximately $16.1 million. Post-transaction, Smith now owns 544,847 shares in Microsoft, valued at around $219 million, also indicating no change in his overall ownership percentage.

In total, Microsoft insiders have sold 190,629 shares valued at nearly $78 million in the past three months. Currently, only 0.03% of the company’s stock is held by corporate insiders.

Institutional Investor Movements

Recently, several large institutional investors have adjusted their positions in Microsoft. For instance, Banque Cantonale Vaudoise increased its holding by 1.8% in the first quarter, now owning 282,295 shares worth $118.8 million after purchasing an additional 5,044 shares. Similarly, Wedmont Private Capital raised its stake by 5.1%, bringing its ownership to 80,247 shares valued at $34.2 million after acquiring an extra 3,902 shares.

Bank of New Hampshire also increased its stake by 15.5%, owning 36,567 shares valued at $15.4 million after an additional purchase of 4,913 shares. Grassi Investment Management and Grandview Asset Management also reported minor increases in their holdings. Overall, hedge funds and institutional investors currently control about 71.13% of Microsoft’s stock.

Analysts’ Outlook on Microsoft

Wall Street analysts have been busy issuing reports concerning Microsoft’s stock. TD Cowen raised their target price from $470 to $495, labeling the stock as a “buy.” Royal Bank of Canada reaffirmed an “outperform” rating with a target price of $500, while Wells Fargo reiterated a “buy” rating. Citigroup, however, reduced their target from $520 to $500 but kept a “buy” rating. Overall, research suggests that the sentiment around Microsoft remains strongly positive, with a consensus rating of “Moderate Buy” and an average price target of $495.68, reflecting potential for growth in the near term.

Microsoft Stock Performance

On Tuesday, Microsoft’s stock rose by 2.1%, reaching $427.51 during midday trading. The trading volume surpassed the average, with 23,863,133 shares changing hands compared to the regular volume of 20,286,785. Over recent months, Microsoft has shown strong performance, with a fifty-day moving average of $419.90 and a 200-day moving average of $424.55. The company’s market capitalization stands at $3.18 trillion.

For additional context, Microsoft reported its quarterly earnings results on July 30th, yielding earnings per share of $2.95, exceeding analysts’ expectations of $2.90. Revenue for the quarter reached $64.73 billion, a 15.2% year-on-year increase.

Dividends and Share Buyback Plan

Recently, Microsoft announced a share repurchase program of $60 billion, allowing the company to reacquire up to 1.9% of its outstanding shares, signifying the board’s belief that shares are undervalued.

Furthermore, Microsoft plans to pay a quarterly dividend of $0.83 per share, with the payment scheduled for December 12th, reflecting an annualized dividend increase to $3.32 and a current yield of 0.78%. This adjustment marks an increase from the previous dividend payout of $0.75, showcasing the firm’s commitment to returning value to shareholders.

Company Overview

Microsoft Corporation is known for developing and supporting software and services globally. Their offerings include popular products such as Microsoft Teams, Office 365, and various cloud services.

Conclusion

The unusual spike in call options trading suggests increased investor confidence in Microsoft, in tandem with significant insider trading and institutional investment activity. This multifaceted perspective highlights Microsoft as a key player in the market going forward.

Microsoft, Options, Insider