Stock Analysis

Possible bearish signals as The Kraft Heinz Company (NASDAQ:KHC) insiders disposed of US$2.3m worth of stock

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NasdaqGS:KHC
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Many The Kraft Heinz Company (NASDAQ:KHC) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

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.

Our analysis indicates that KHC is potentially undervalued!

The Last 12 Months Of Insider Transactions At Kraft Heinz

The EVP, Global General Counsel, Rashida La Lande, made the biggest insider sale in the last 12 months. That single transaction was for US$1.2m worth of shares at a price of US$38.36 each. That means that even when the share price was below the current price of US$39.42, 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. We note that the biggest single sale was 53% of Rashida La Lande's holding.

Insiders in Kraft Heinz 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. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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NasdaqGS:KHC Insider Trading Volume December 7th 2022

I will like Kraft Heinz better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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. We usually like to see fairly high levels of insider ownership. It's great to see that Kraft Heinz insiders own 0.5% of the company, worth about US$244m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Kraft Heinz Tell Us?

It doesn't really mean much that no insider has traded Kraft Heinz shares in the last quarter. While we feel good about high insider ownership of Kraft Heinz, we can't say the same about the selling of shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Kraft Heinz. In terms of investment risks, we've identified 3 warning signs with Kraft Heinz and understanding them should be part of your investment process.

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, but not derivative transactions.

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Find out whether Kraft Heinz is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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