Designer Brands Insider Sellers Miss The Bus As Stock Jumps 30%

Last week, Designer Brands Inc.'s (NYSE:DBI) stock jumped 30%, but insiders who sold US$373k worth of stock in over the past year are likely to be in a better position. Selling at an average price of US$5.16, which is higher than the current price, may have been the wisest decision for these insiders as their investment would have been worth less now than when they sold.

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.

We've discovered 4 warning signs about Designer Brands. View them for free.

Designer Brands Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Senior VP & Controller, Mark Haley, sold US$156k worth of shares at a price of US$6.04 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (US$3.79). So it may not tell us anything about how insiders feel about the current share price.

In the last year Designer Brands 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. By clicking on the graph below, you can see the precise details of each insider transaction!

View our latest analysis for Designer Brands

I will like Designer Brands better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insiders At Designer Brands Have Sold Stock Recently

The last quarter saw substantial insider selling of Designer Brands shares. In total, Executive VP & President of Designer Brands Canada Inc. Mary Turner dumped US$72k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Designer Brands insiders own 28% of the company, worth about US$45m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Designer Brands Tell Us?

An insider sold Designer Brands shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. 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. Every company has risks, and we've spotted 4 warning signs for Designer Brands (of which 1 is a bit concerning!) you should know about.

Of course Designer Brands 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.