Insiders At CAVA Group Sold US$611m In Stock, Alluding To Potential Weakness

In the last year, many CAVA Group, Inc. (NYSE:CAVA) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

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CAVA Group Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Chair of the Board of Directors, Ronald Shaich, for US$223m worth of shares, at about US$87.25 per share. That means that even when the share price was below the current price of US$99.06, 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 100% of Ronald Shaich's stake.

CAVA Group insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

See our latest analysis for CAVA Group

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Insiders At CAVA Group Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at CAVA Group. In total, Founder Theodore Xenohristos dumped US$887k 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.

Does CAVA Group Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. CAVA Group insiders own 1.9% of the company, currently worth about US$219m 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.

What Might The Insider Transactions At CAVA Group Tell Us?

An insider sold CAVA Group shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. On the plus side, CAVA Group makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing CAVA Group. Case in point: We've spotted 2 warning signs for CAVA Group you should be aware of, and 1 of them is concerning.

But note: CAVA Group 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.