Western Digital (NASDAQ: WDC) director sells 18.7% of stake under a preset plan

What happened

Martin I. Cole, a director of Western Digital Corp (NASDAQ: WDC), sold 4,000 shares of common stock on Oct. 29 for about $1.58 million.

Cole sold in 12 reported lines, each at a weighted average price. Those averages ran from $390.04 to $401.47, and the largest line was 723 shares at $398.45. Within the averages, individual trades ranged from $389.61 to $401.81.

After the sale, Cole held 17,433 shares. The shares are reported as directly held.

The Form 4, signed for Cole by attorney-in-fact Sandra Garcia on Oct. 30, says the sales were made under a Rule 10b5-1 trading plan. Cole adopted that plan on March 5. A box at the top of the form marks the trades as made under a plan meant to meet the affirmative defense conditions of Rule 10b5-1(c).

Key numbers

Metric	Latest	Change	Source
Shares sold	4,000 shares		SEC Form 4
Total sale value	$1.58 million		SEC Form 4
Weighted average price range	$390.04 to $401.47		SEC Form 4
Shares held after the sale	17,433 shares	from 21,433 shares, -18.7%	Calculated from SEC Form 4
Sale as share of prior holding	18.7%		Calculated from SEC Form 4

Read more: Western Digital (WDC) company research

Why it matters

In percentage terms, the sale is a large cut to one director's holding. The shares sold equal 18.7% of the 21,433 Cole held before the trade, by OptimistFi's calculation.

OptimistFi has argued that Western Digital turns rising AI and cloud capacity needs into durable revenue, high gross margins and strong free cash flow that management returns to shareholders. The case is about the hard-disk-drive business, and a director's share sale is not a measure of that business. A sale under a pre-adopted plan leaves the investment case unchanged.

Because the sales ran under a plan adopted months before the trade, the sale alone is weak evidence about Western Digital's prospects in either direction. Cole also still owns shares in the company.

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What's next

The next test is Western Digital's next quarterly report. OptimistFi's case rests on three numbers from that report: revenue, gross margin and free cash flow. Rising revenue and steady margins would support the case. Falling margins or cash flow would challenge it, whatever the trading plan says.

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