LendInvest Insiders Made A Wise Decision By Selling UK£416k Worth Of Stock

While it’s been a great week for LendInvest plc (LON:LINV) shareholders after stock gained 13%, company insiders might have missed out on those gains after selling stock earlier this year. They could have sold their shares at much higher prices and gotten a better return on their investment if they had waited.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

We've discovered 2 warning signs about LendInvest. View them for free.

LendInvest Insider Transactions Over The Last Year

The Co-Founder, Ian Thomas, made the biggest insider sale in the last 12 months. That single transaction was for UK£416k worth of shares at a price of UK£0.26 each. That means that even when the share price was below the current price of UK£0.30, an insider wanted to cash in some shares. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 3.8% of Ian Thomas's stake. The only individual insider seller over the last year was Ian Thomas.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

View our latest analysis for LendInvest

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. LendInvest insiders own 58% of the company, currently worth about UK£25m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The LendInvest Insider Transactions Indicate?

It doesn't really mean much that no insider has traded LendInvest shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the LendInvest insiders selling. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that LendInvest is showing 2 warning signs in our investment analysis, and 1 of those can't be ignored...

But note: LendInvest 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 of direct interests only, but not derivative transactions or indirect interests.

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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.