Naked Wines Gains 11%, Insider Trades Reap Benefit

Last week, Naked Wines plc (LON:WINE) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 11% last week, resulting in a UK£4.4m increase in the company's market worth, implying a 26% gain on their initial purchase. In other words, the original UK£340.4k purchase is now worth UK£430.2k.

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 Naked Wines

Naked Wines Insider Transactions Over The Last Year

The Independent Director Jack Pailing made the biggest insider purchase in the last 12 months. That single transaction was for UK£62k worth of shares at a price of UK£0.43 each. We do like to see buying, but this purchase was made at well below the current price of UK£0.59. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Over the last year, we can see that insiders have bought 729.18k shares worth UK£340k. But insiders sold 11.74k shares worth UK£12k. In total, Naked Wines insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Naked Wines Insiders Bought Stock Recently

It's good to see that Naked Wines insiders have made notable investments in the company's shares. In total, insiders bought UK£188k worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.

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. Our data suggests Naked Wines insiders own 4.8% of the company, worth about UK£2.1m. I generally like to see higher levels of ownership.

So What Does This Data Suggest About Naked Wines Insiders?

The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Naked Wines insiders are expecting a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 2 warning signs for Naked Wines (1 is significant!) that we believe deserve your full attention.

Of course Naked Wines 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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.