Stock Analysis

Insiders who bought Naked Wines plc (LON:WINE) stock in the last 12 months recover some losses, but still down UK£65k

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Insiders who bought UK£129k worth of Naked Wines plc (LON:WINE) stock in the last year recovered part of their losses as the stock rose by 11% last week. However, total losses seen by insiders are still UK£65k but in since the time of purchase.

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.

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The Last 12 Months Of Insider Transactions At Naked Wines

The Independent Non-Executive Chairman Darryl Graham Rawlings made the biggest insider purchase in the last 12 months. That single transaction was for UK£128k worth of shares at a price of UK£8.06 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£3.98). 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. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While Naked Wines insiders bought shares during the last year, they didn't sell. 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!

AIM:WINE Insider Trading Volume April 22nd 2022

Naked Wines is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data isn't picking up on much insider ownership at Naked Wines, though insiders do hold about UK£765k worth of shares. But they may have an indirect interest through a corporate structure that we haven't picked up on. We might be missing something but that seems like very low insider ownership.

So What Do The Naked Wines Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. The transactions are fine but it'd be more encouraging if Naked Wines insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Naked Wines. In terms of investment risks, we've identified 1 warning sign with Naked Wines and understanding this should be part of your investment process.

But note: Naked Wines 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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