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Freshpet, Inc. (NASDAQ:FRPT) up 14%, but insiders are still down 33% after purchasing US$1.1m of stock last year

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Some of the losses seen by insiders who purchased US$1.1m worth of Freshpet, Inc. (NASDAQ:FRPT) shares over the past year were recovered after the stock increased by 14% over the past week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at US$349k since the time of purchase.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Freshpet

The Last 12 Months Of Insider Transactions At Freshpet

In the last twelve months, the biggest single purchase by an insider was when Independent Chairman of the Board Charles Norris bought US$550k worth of shares at a price of US$110 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$65.30). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

Happily, we note that in the last year insiders paid US$1.1m for 10.82k shares. On the other hand they divested 1.21k shares, for US$206k. In the last twelve months there was more buying than selling by Freshpet insiders. They paid about US$97.53 on average. These transactions suggest that insiders have considered the current price attractive. 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!

insider-trading-volume
insider-trading-volume

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Freshpet Insiders Bought Stock Recently

At Freshpet,over the last quarter, we have observed quite a lot more insider buying than insider selling. We can see that Independent Director J. Basto paid US$197k for shares in the company. But we did see Executive Vice President of Manufacturing & Supply Chain Stephen Weise sell shares worth US$801. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Insider Ownership of Freshpet

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Freshpet insiders own 3.4% of the company, worth about US$107m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Freshpet Insider Transactions Indicate?

It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. When combined with notable insider ownership, these factors suggest Freshpet insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! 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. Be aware that Freshpet is showing 3 warning signs in our investment analysis, and 1 of those is significant...

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.