Have Lovesac Insiders Been Selling Stock?

Anyone interested in The Lovesac Company (NASDAQ:LOVE) should probably be aware that the Director, Jack Krause, recently divested US$262k worth of shares in the company, at an average price of US$26.22 each. However, the silver lining is that the sale only reduced their total holding by 5.1%, so we're hesitant to read anything much into it, on its own.

Check out our latest analysis for Lovesac

The Last 12 Months Of Insider Transactions At Lovesac

The Founder, Shawn Nelson, made the biggest insider sale in the last 12 months. That single transaction was for US$556k worth of shares at a price of US$23.35 each. That means that an insider was selling shares at slightly below the current price (US$25.63). 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 10% of Shawn Nelson's holding.

Over the last year, we can see that insiders have bought 35.90k shares worth US$770k. But insiders sold 58.86k shares worth US$1.4m. In total, Lovesac insiders sold more than they bought over the last year. 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!

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 Of Lovesac

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. It appears that Lovesac insiders own 5.4% of the company, worth about US$21m. 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 Does This Data Suggest About Lovesac Insiders?

An insider sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. 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. While conducting our analysis, we found that Lovesac has 3 warning signs and it would be unwise to ignore these.

Of course Lovesac 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.

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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.