Insider Purchases Worth US$2.61m See Losses As Sleep Number Market Value Drops To US$189m

Insiders who acquired US$2.61m worth of Sleep Number Corporation's (NASDAQ:SNBR) stock at an average price of US$9.05 in the past 12 months may be dismayed by the recent 12% price decline. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$2.27m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At Sleep Number

In the last twelve months, the biggest single purchase by an insider was when insider Linda Kozlowski bought US$751k worth of shares at a price of US$7.28 per share. That means that an insider was happy to buy shares at around the current price of US$7.88. That means they have been optimistic about the company in the past, though they may have changed their mind. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Sleep Number share holders is that insiders were buying at near the current price.

Sleep Number insiders may have bought shares in the last year, but they didn't sell any. Their average price was about US$9.05. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

View our latest analysis for Sleep Number

Sleep Number 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.

Sleep Number Insiders Bought Stock Recently

It's good to see that Sleep Number insiders have made notable investments in the company's shares. Interim Chief Financial Officer Robert Ryder spent US$102k on stock, and there wasn't any selling. This could be interpreted as suggesting a positive outlook.

Does Sleep Number Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Sleep Number insiders own about US$12m worth of shares. That equates to 6.2% of the company. 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 Sleep Number Tell Us?

It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Given that insiders also own a fair bit of Sleep Number we think they are probably pretty confident of a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 3 warning signs for Sleep Number (2 are significant) you should be aware of.

But note: Sleep Number may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.