Selling Norwegian Cruise Line Holdings Shares at a Lower Price Than Current Market Value May Have Been a Costly Mistake for Insiders

Despite the fact that Norwegian Cruise Line Holdings Ltd.'s (NYSE:NCLH) value has dropped 16% in the last week insiders who sold US$7.6m worth of stock in the past 12 months have had less success. Insiders would probably have been better off holding on to their shares given that the average selling price of US$23.63 is still lower than the current share price.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Norwegian Cruise Line Holdings

The Last 12 Months Of Insider Transactions At Norwegian Cruise Line Holdings

Over the last year, we can see that the biggest insider sale was by the President, Harry Sommer, for US$2.5m worth of shares, at about US$24.67 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$20.00. So it is hard to draw any strong conclusion from it.

Happily, we note that in the last year insiders paid US$745k for 41.29k shares. But they sold 323.71k shares for US$7.6m. In total, Norwegian Cruise Line Holdings insiders sold more than they bought over the last year. The sellers received a price of around US$23.63, on average. We are not joyful about insider selling. But we note that the selling, on average, was at well above the recently traded price of US$20.00. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 0.6% of Norwegian Cruise Line Holdings shares, worth about US$58m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Norwegian Cruise Line Holdings Tell Us?

The fact that there have been no Norwegian Cruise Line Holdings insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by Norwegian Cruise Line Holdings insiders. The modest level of insider ownership is, at least, some comfort. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. While conducting our analysis, we found that Norwegian Cruise Line Holdings has 1 warning sign and it would be unwise to ignore it.

But note: Norwegian Cruise Line Holdings 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.