Don't Ignore The Insider Selling In Vital Farms

We'd be surprised if Vital Farms, Inc. (NASDAQ:VITL) shareholders haven't noticed that the Independent Director, Karl Khoury, recently sold US$336k worth of stock at US$31.02 per share. On the bright side, that sale was only 7.7% of their holding, so we doubt it's very meaningful, on its own.

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Vital Farms Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Founder & Executive Chairman, Matthew O'Hayer, sold US$2.2m worth of shares at a price of US$44.51 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$29.52). So it is hard to draw any strong conclusion from it.

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

Check out our latest analysis for Vital Farms

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Insider Ownership Of Vital Farms

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. Vital Farms insiders own about US$340m worth of shares (which is 26% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Vital Farms Insider Transactions Indicate?

An insider sold Vital Farms shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. But it is good to see that Vital Farms is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. For example - Vital Farms has 1 warning sign we think you should be aware of.

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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.