Are Insiders Selling Latitude Consolidated Limited (ASX:LCD) Stock?

We often see insiders buying up shares in companies that perform well over the long term. 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 before you buy or sell Latitude Consolidated Limited (ASX:LCD), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

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'.

See our latest analysis for Latitude Consolidated

Latitude Consolidated Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Linda Steinepreis, sold AU$201k worth of shares at a price of AU$0.025 per share. That means that an insider was selling shares at slightly below the current price (AU$0.029). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was 56% of Linda Steinepreis's stake. Notably Linda Steinepreis was also the biggest buyer, having purchased AU$53k worth of shares.

All up, insiders sold more shares in Latitude Consolidated than they bought, over the last year. The sellers received a price of around AU$0.023, on average. It's not too encouraging to see that insiders have sold at below the current price. But we wouldn't put too much weight on the insider selling. You can see a visual depiction of insider transactions (by companies and 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!

I will like Latitude Consolidated better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Does Latitude Consolidated Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 28% of Latitude Consolidated shares, worth about AU$2.6m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Latitude Consolidated Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Latitude Consolidated shares in the last quarter. Still, the insider transactions at Latitude Consolidated in the last 12 months are not very heartening. But we do like the fact that insiders own a fair chunk of the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 5 warning signs for Latitude Consolidated (of which 3 make us uncomfortable!) you should know about.

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.

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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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