Potential SmileDirectClub, Inc. (NASDAQ:SDC) shareholders may wish to note that the Independent Director, Richard Wallman, recently bought US$413k worth of stock, paying US$7.80 for each share. That certainly has us anticipating the best, especially since they thusly increased their own holding by 156%, potentially signalling some real optimism.
SmileDirectClub Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when CEO & Chairman David Katzman bought US$684k worth of shares at a price of US$18.50 per share. So it’s clear an insider wanted to buy, even at a higher price than the current share price (being US$7.97). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
SmileDirectClub insiders may have bought shares in the last year, but they didn’t sell any. Their average price was about US$11.76. I’d consider this a positive as it suggests insiders see value at around the current price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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).
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. Based on our data, SmileDirectClub insiders have about 0.3% of the stock, worth approximately US$2.9m. We prefer to see high levels of insider ownership.
So What Do The SmileDirectClub Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. But we don’t feel the same about the fact the company is making losses. While the overall levels of insider ownership are below what we’d like to see, the history of transactions imply that SmileDirectClub insiders are reasonably well aligned, and optimistic for the future. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing SmileDirectClub. At Simply Wall St, we found 1 warning sign for SmileDirectClub that deserve your attention before buying any shares.
Of course SmileDirectClub may not be the best stock to buy. So you may wish to see this free collection of high quality 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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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. 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.
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