Don't Ignore The Insider Selling In Honest Company

We wouldn't blame The Honest Company, Inc. (NASDAQ:HNST) shareholders if they were a little worried about the fact that Jessica Warren, the Founder & Director recently netted about US$2.4m selling shares at an average price of US$3.04. That's a big disposal, and it decreased their holding size by 13%, which is notable but not too bad.

See our latest analysis for Honest Company

The Last 12 Months Of Insider Transactions At Honest Company

In fact, the recent sale by Jessica Warren was the biggest sale of Honest Company shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at around the current price of US$3.06. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

Over the last year, we can see that insiders have bought 164.25k shares worth US$220k. But they sold 1.36m shares for US$4.0m. In total, Honest Company insiders sold more than they bought over the last year. They sold for an average price of about US$2.94. It's not particularly great to see insiders were selling shares at below recent prices. But we wouldn't put too much weight on the insider selling. 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!

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Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Honest Company insiders own 8.8% of the company, worth about US$26m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Honest Company Tell Us?

Insiders sold Honest Company shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. While insiders do own shares, they don't own a heap, and they have been selling. 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. You'd be interested to know, that we found 4 warning signs for Honest Company and we suggest you have a look.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.