We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Lifeway Foods, Inc. (NASDAQ:LWAY).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. 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.’
Lifeway Foods Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Chairman Ludmila Smolyansky sold US$135k worth of shares at a price of US$6.08 per share. That is hardly a positive sign, even though it took place above the latest price (US$2.32). So it may not shed much light on insider confidence at current levels.
We note that in the last year insiders divested 58.98k shares for a total of US$351k. All up, insiders sold more shares in Lifeway Foods than they bought, over the last year. They sold for an average price of about US$5.95. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is US$2.32). You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Lifeway Foods insiders own 48% of the company, worth about US$17m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Lifeway Foods Tell Us?
It doesn’t really mean much that no insider has traded Lifeway Foods shares in the last quarter. It’s great to see high levels of insider ownership, but looking back at the last year, we don’t gain confidence from the Lifeway Foods insiders selling. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
But note: Lifeway Foods may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.