Insiders Could Have Profited By Holding onto loanDepot Shares Despite 20% Drop

Even though loanDepot, Inc. (NYSE:LDI) has fallen by 20% over the past week , insiders who sold US$26m worth of stock over the past year have had less luck. The average selling price of US$3.16 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At loanDepot

Notably, that recent sale by Founder Anthony Hsieh was not the only time they sold loanDepot shares this year. They previously made an even bigger sale of -US$6.7m worth of shares at a price of US$3.25 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (US$2.23). So it may not tell us anything about how insiders feel about the current share price.

Insiders in loanDepot didn't buy any shares in the last year. 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!

Check out our latest analysis for loanDepot

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loanDepot Insiders Are Selling The Stock

The last three months saw significant insider selling at loanDepot. Specifically, insiders ditched US$5.7m 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

For a common shareholder, it is worth checking how many shares are held by company insiders. 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 loanDepot insiders own 5.3% of the company, worth about US$39m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At loanDepot Tell Us?

Insiders haven't bought loanDepot stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. Insiders own shares, but we're still pretty cautious, given the history of sales. We'd practice some caution before buying! 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 2 warning signs for loanDepot you should be aware of.

Of course loanDepot may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.