Grove Collaborative Holdings Gains 24%, Insider Trades Reap Benefit

Grove Collaborative Holdings, Inc. (NYSE:GROV) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 24%, resulting in a US$12m rise in the company's market capitalisation, translating to a gain of 20% on their initial investment. As a result, their original purchase of US$370.6k worth of stock is now worth US$446.6k.

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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Grove Collaborative Holdings Insider Transactions Over The Last Year

The insider Jason Karp made the biggest insider purchase in the last 12 months. That single transaction was for US$86k worth of shares at a price of US$1.17 each. Even though the purchase was made at a significantly lower price than the recent price (US$1.48), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

In the last twelve months Grove Collaborative Holdings insiders were buying shares, but not selling. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Check out our latest analysis for Grove Collaborative Holdings

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Grove Collaborative Holdings Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Grove Collaborative Holdings. In total, insiders bought US$322k 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 Grove Collaborative Holdings

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 9.8% of Grove Collaborative Holdings shares, worth about US$4.6m, according to our data. But they may have an indirect interest through a corporate structure that we haven't picked up on. We do generally prefer see higher levels of insider ownership.

So What Do The Grove Collaborative Holdings Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Grove Collaborative Holdings insiders are reasonably well aligned, and optimistic for the future. 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. To that end, you should learn about the 4 warning signs we've spotted with Grove Collaborative Holdings (including 1 which is significant).

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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.