Should You Review Recent Insider Transactions At Vital Farms, Inc. (NASDAQ:VITL)?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Vital Farms, Inc. (NASDAQ:VITL), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

See our latest analysis for Vital Farms

Vital Farms Insider Transactions Over The Last Year

The Founder & Executive Chairman, Matthew O'Hayer, made the biggest insider sale in the last 12 months. That single transaction was for US$27m worth of shares at a price of US$20.46 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$28.46. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 11% of Matthew O'Hayer's holding.

Happily, we note that in the last year insiders paid US$286k for 13.00k shares. But they sold 2.39m shares for US$49m. All up, insiders sold more shares in Vital Farms than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership of Vital Farms

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. Vital Farms insiders own about US$414m worth of shares (which is 38% of the company). 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 Vital Farms Tell Us?

It doesn't really mean much that no insider has traded Vital Farms shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Vital Farms insiders selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Vital Farms. You'd be interested to know, that we found 1 warning sign for Vital Farms and we suggest you have a look.

But note: Vital Farms 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, but not derivative transactions.

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This article by Simply Wall St is general in nature. 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.
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