We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in SmileDirectClub, Inc. (NASDAQ:SDC).
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 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.
The Last 12 Months Of Insider Transactions At SmileDirectClub
CEO & Chairman David Katzman made the biggest insider purchase in the last 12 months. That single transaction was for US$684k worth of shares at a price of US$18.50 each. That means that even when the share price was higher than US$12.37 (the recent price), an insider wanted to purchase shares. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
While SmileDirectClub insiders bought shares last year, they didn’t sell. They paid about US$16.54 on average. I’d consider this a positive as it suggests insiders see value at around the current price. 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!
SmileDirectClub is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
SmileDirectClub Insiders Bought Stock Recently
Over the last quarter, SmileDirectClub insiders have spent a meaningful amount on shares. Independent Director Richard Wallman spent US$115k on stock, and there wasn’t any selling. This makes one think the business has some good points.
Insider Ownership of SmileDirectClub
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. Insiders own 0.1% of SmileDirectClub shares, worth about US$7.2m, according to our data. Whilst better than nothing, we’re not overly impressed by these holdings.
So What Does This Data Suggest About SmileDirectClub Insiders?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn’t make a profit over the last twelve months, which makes us cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that SmileDirectClub insiders are expecting a bright future. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for SmileDirectClub.
But note: SmileDirectClub 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.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.