Insider Stock Buying Reaches US$2.48m On Lululemon Athletica

Multiple insiders secured a larger position in Lululemon Athletica Inc. (NASDAQ:LULU) shares over the last 12 months. This is reassuring as this suggests that insiders have increased optimism about the company's prospects.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Lululemon Athletica

Lululemon Athletica Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Independent Chair of the Board Martha A. Morfitt for US$1.4m worth of shares, at about US$390 per share. That means that an insider was happy to buy shares at around the current price of US$395. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. In this case we're pleased to report that the insider purchases were made at close to current prices.

In the last twelve months insiders purchased 7.70k shares for US$2.5m. But they sold 2.79k shares for US$1.1m. In the last twelve months there was more buying than selling by Lululemon Athletica insiders. The average buy price was around US$322. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. 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 undervalued small cap companies that insiders are buying.

Insiders At Lululemon Athletica Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Lululemon Athletica. In total, President of Americas & Global Guest Innovation Celeste Burgoyne sold US$942k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

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. Lululemon Athletica insiders own 3.7% of the company, currently worth about US$1.7b 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 Lululemon Athletica Insider Transactions Indicate?

An insider hasn't bought Lululemon Athletica stock in the last three months, but there was some selling. In contrast, they appear keener if you look at the last twelve months. On top of that, insiders own a significant portion of the company. So the recent selling doesn't worry us. Therefore, you should definitely take a look at this FREE report showing analyst forecasts for Lululemon Athletica.

But note: Lululemon Athletica 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.

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.