Life360, Inc. (ASX:360) insiders are still down US$257k after purchasing last year, recent gain helped regain some losses

By
Simply Wall St
Published
March 17, 2022
ASX:360
Source: Shutterstock

Insiders who bought US$519k worth of Life360, Inc. (ASX:360) stock in the last year have seen some of their losses recouped as the stock gained 9.2% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled US$257k since the time of purchase.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Life360

The Last 12 Months Of Insider Transactions At Life360

In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Director James Synge bought AU$519k worth of shares at a price of AU$10.85 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$5.23). It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. James Synge was the only individual insider to buy shares in the last twelve months.

You can see the insider transactions (by companies and 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!

insider-trading-volume
ASX:360 Insider Trading Volume March 17th 2022

Life360 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.

Does Life360 Boast High Insider Ownership?

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. Insiders own 12% of Life360 shares, worth about AU$116m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Life360 Insider Transactions Indicate?

The fact that there have been no Life360 insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, Life360 insiders feel good about the company's future. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. While conducting our analysis, we found that Life360 has 3 warning signs and it would be unwise to ignore these.

But note: Life360 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.

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