LifeMD, Inc. (NASDAQ:LFMD) up 12%, but insiders are still down 37% after purchasing US$2.3m of stock last year

By
Simply Wall St
Published
March 23, 2022
NasdaqGM:LFMD
Source: Shutterstock

Insiders who bought US$2.3m worth of LifeMD, Inc. (NASDAQ:LFMD) stock in the last year have seen some of their losses recouped as the stock gained 12% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling US$870k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for LifeMD

LifeMD Insider Transactions Over The Last Year

The Independent Director Bertrand Velge made the biggest insider purchase in the last 12 months. That single transaction was for US$430k worth of shares at a price of US$3.91 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$3.60). It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

While LifeMD insiders bought shares during the last year, they didn't sell. Their average price was about US$5.74. I'd consider this a positive as it suggests insiders see value at around the current price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
NasdaqGM:LFMD Insider Trading Volume March 23rd 2022

LifeMD is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

LifeMD Insiders Bought Stock Recently

We saw some LifeMD insider buying shares in the last three months. Insiders bought US$22k worth of shares in that time. We like it when there are only buyers, and no sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Does LifeMD Boast High 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. We usually like to see fairly high levels of insider ownership. It appears that LifeMD insiders own 14% of the company, worth about US$15m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The LifeMD Insider Transactions Indicate?

We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in LifeMD and their transactions don't cause us concern. While we like knowing 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. At Simply Wall St, we found 1 warning sign for LifeMD that deserve your attention before buying any shares.

Of course LifeMD 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, but not derivative transactions.

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