Local Bounti's Market Cap Up US$2.4m Following Year Of Insider Stock Buying

Local Bounti Corporation (NYSE:LOCL) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 10%, resulting in a US$2.4m rise in the company's market capitalisation, translating to a gain of 109% on their initial investment. In other words, the original US$345.9k purchase is now worth US$722.6k.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Local Bounti

Local Bounti Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Co-Founder Craig Hurlbert bought US$143k worth of shares at a price of US$1.35 per share. We do like to see buying, but this purchase was made at well below the current price of US$3.04. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

In the last twelve months insiders purchased 237.69k shares for US$346k. On the other hand they divested 4.25k shares, for US$16k. In total, Local Bounti insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Local Bounti is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Local Bounti insiders own about US$14m worth of shares (which is 54% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Local Bounti Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like Local Bounti insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 6 warning signs for Local Bounti (1 shouldn't be ignored!) and we strongly recommend you look at them before investing.

Of course Local Bounti 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com