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We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Sprouts Farmers Market, Inc. (NASDAQ:SFM), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Sprouts Farmers Market
Over the last year, we can see that the biggest insider purchase was by Director Shon Boney for US$2.0m worth of shares, at about US$22.83 per share. So it’s clear an insider wanted to buy, even at a higher price than the current share price (being US$21.70). It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Happily, we note that in the last year insiders paid US$2.5m for 110k shares. But they sold 65422 for US$1.5m. In total, Sprouts Farmers Market insiders bought more than they sold over the last year. You can see the insider transactions (by 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!
Sprouts Farmers Market is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Sprouts Farmers Market Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Sprouts Farmers Market shares. In total, insiders sold US$1.2m worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership of Sprouts Farmers Market
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Sprouts Farmers Market insiders own 0.6% of the company, worth about US$16m. 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 Sprouts Farmers Market Insider Transactions Indicate?
Insiders sold stock recently, but they haven’t been buying. But we take heart from prior transactions. It’s good to see insiders are shareholders. So the recent selling doesn’t worry us too much. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Sprouts Farmers Market.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.