Herbalife Insiders Added US$1.42m Of Stock To Their Holdings

When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Herbalife Ltd.'s (NYSE:HLF) instance, it's good news for shareholders.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Herbalife

The Last 12 Months Of Insider Transactions At Herbalife

Over the last year, we can see that the biggest insider purchase was by Chairman & CEO Michael Johnson for US$498k worth of shares, at about US$8.07 per share. We do like to see buying, but this purchase was made at well below the current price of US$10.85. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

While Herbalife insiders bought shares during the last year, they didn't sell. Their average price was about US$9.03. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. 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!

Herbalife 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.

Herbalife Insiders Bought Stock Recently

It's good to see that Herbalife insiders have made notable investments in the company's shares. In total, insiders bought US$525k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.

Insider Ownership Of Herbalife

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. It appears that Herbalife insiders own 1.5% of the company, worth about US$17m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Herbalife Insider Transactions Indicate?

It is good to see recent purchasing. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest Herbalife insiders are well aligned, and that they may think the share price is too low. While it's good to be aware of 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. When we did our research, we found 3 warning signs for Herbalife (2 shouldn't be ignored!) that we believe deserve your full attention.

Of course Herbalife 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