Don't Ignore The Insider Selling In Grocery Outlet Holding

We'd be surprised if Grocery Outlet Holding Corp. (NASDAQ:GO) shareholders haven't noticed that the Chairman of the Board, Eric Lindberg, recently sold US$499k worth of stock at US$16.88 per share. However, the silver lining is that the sale only reduced their total holding by 1.2%, so we're hesitant to read anything much into it, on its own.

View our latest analysis for Grocery Outlet Holding

The Last 12 Months Of Insider Transactions At Grocery Outlet Holding

The Lead Independent Director Erik Ragatz made the biggest insider purchase in the last 12 months. That single transaction was for US$2.1m worth of shares at a price of US$20.91 each. That means that even when the share price was higher than US$16.79 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

In the last twelve months insiders purchased 256.50k shares for US$5.3m. But they sold 198.59k shares for US$5.0m. In total, Grocery Outlet Holding insiders bought more than they sold 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 want to know exactly who sold, for how much, and when, simply click on the graph below!

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.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Grocery Outlet Holding insiders own 3.9% of the company, worth about US$65m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Grocery Outlet Holding Insider Transactions Indicate?

It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Grocery Outlet Holding insiders are well aligned, and that they may think the share price is too low. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for Grocery Outlet Holding you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.