Leon's Furniture Limited (TSE:LNF) stock was sold by a number of insiders in the recent year, which isn't a positive indicator for investors

By
Simply Wall St
Published
January 19, 2022
TSX:LNF
Source: Shutterstock

A number of Leon's Furniture Limited (TSE:LNF) insiders sold their shares in the last year, which may have raised concerns among investors. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Leon's Furniture

Leon's Furniture Insider Transactions Over The Last Year

The insider, Gregory Nakonechny, made the biggest insider sale in the last 12 months. That single transaction was for CA$335k worth of shares at a price of CA$24.55 each. That means that an insider was selling shares at below the current price (CA$24.95). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 30% of Gregory Nakonechny's stake.

Over the last year we saw more insider selling of Leon's Furniture shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
TSX:LNF Insider Trading Volume January 19th 2022

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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. We usually like to see fairly high levels of insider ownership. Insiders own 4.6% of Leon's Furniture shares, worth about CA$87m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Leon's Furniture Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. We don't take much encouragement from the transactions by Leon's Furniture insiders. But we do like the fact that insiders own a fair chunk of the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we found 1 warning sign for Leon's Furniture that deserve your attention before buying any shares.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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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