We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Lovisa Holdings Limited (ASX:LOV).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
Lovisa Holdings Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the MD & Executive Director, Shane Fallscheer, sold AU$8.7m worth of shares at a price of AU$9.70 per share. That means that an insider was selling shares at slightly below the current price (AU$12.82). 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. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 18% of Shane Fallscheer's stake. Shane Fallscheer was the only individual insider to sell shares in the last twelve months.
You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Lovisa Holdings better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Lovisa Holdings Insiders Bought Stock Recently
It's good to see that Lovisa Holdings insiders have made notable investments in the company's shares. Specifically, Independent Non-Executive Director John Armstrong bought AU$100k worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.
Does Lovisa Holdings Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Lovisa Holdings insiders own about AU$637m worth of shares (which is 47% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Lovisa Holdings Tell Us?
The recent insider purchase is heartening. But we can't say the same for the transactions over the last 12 months. The recent buying by an insider , along with high insider ownership, suggest that Lovisa Holdings insiders are fairly aligned, and optimistic. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Lovisa Holdings.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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, but not derivative transactions.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.