We often see insiders buying up shares in companies that perform well over the long term. 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 before you buy or sell 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
Want to help shape the future of investing tools? Participate in a short research study and receive a subscription valued at $60.
The Last 12 Months Of Insider Transactions At 1-800-FLOWERS.COM
Director James Cannavino made the biggest insider sale in the last 12 months. That single transaction was for US$429k worth of shares at a price of US$10.77 each. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$13.28. While their view may have changed since they sold, this isn’t a particularly bullish sign. When an insider sells below the current price, it does tend to make us wonder about the current valuation. It is worth noting that this sale was only 32.9% of James Cannavino’s holding.
In the last twelve months insiders netted US$1.3m for 110.59k shares sold. Over the last year we saw more insider selling of 1-800-FLOWERS.COM shares, than buying. The average sell price was around US$11.81. We don’t gain much confidence from insider selling near the recent share price. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. 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!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that 1-800-FLOWERS.COM insiders own 53% of the company, worth about US$453m. 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 1-800-FLOWERS.COM Tell Us?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. It’s heartening that insiders own plenty of stock, but we’d like to see more insider buying, since the last year of 1-800-FLOWERS.COM insider transactions don’t fill us with confidence. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: 1-800-FLOWERS.COM 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 email@example.com.