Insiders At e.l.f. Beauty Sold US$29m In Stock, Alluding To Potential Weakness

Many e.l.f. Beauty, Inc. (NYSE:ELF) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At e.l.f. Beauty

The Chairman, Tarang Amin, made the biggest insider sale in the last 12 months. That single transaction was for US$5.2m worth of shares at a price of US$53.36 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$121. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 9.1% of Tarang Amin's holding.

In the last year e.l.f. Beauty insiders didn't buy any company stock. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

See our latest analysis for e.l.f. Beauty

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e.l.f. Beauty Insiders Are Selling The Stock

The last three months saw significant insider selling at e.l.f. Beauty. Specifically, insiders ditched US$11m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership Of e.l.f. Beauty

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that e.l.f. Beauty insiders own 2.5% of the company, worth about US$170m. 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 Do The e.l.f. Beauty Insider Transactions Indicate?

Insiders sold e.l.f. Beauty shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing e.l.f. Beauty. Case in point: We've spotted 2 warning signs for e.l.f. Beauty 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.