Don't Ignore The Fact That This Insider Just Sold Some Shares In L Brands, Inc. (NYSE:LB)

By
Simply Wall St
Published
November 24, 2020
NYSE:LB

We wouldn't blame L Brands, Inc. (NYSE:LB) shareholders if they were a little worried about the fact that James Bersani, the President of Real Estate recently netted about US$749k selling shares at an average price of US$39.65. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 8.9%.

Check out our latest analysis for L Brands

L Brands Insider Transactions Over The Last Year

The Founder & Chairman Emeritus, Leslie Wexner, made the biggest insider sale in the last 12 months. That single transaction was for US$89m worth of shares at a price of US$29.70 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$39.98. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 9.1% of Leslie Wexner's stake.

All up, insiders sold more shares in L Brands than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NYSE:LB Insider Trading Volume November 24th 2020

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Does L Brands Boast High Insider Ownership?

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. I reckon it's a good sign if insiders own a significant number of shares in the company. L Brands insiders own about US$1.4b worth of shares (which is 12% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At L Brands Tell Us?

Insiders sold L Brands shares recently, but they didn't buy any. Despite some insider buying, the longer term picture doesn't make us feel much more positive. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For instance, we've identified 3 warning signs for L Brands (1 is significant) you should be aware of.

Of course L 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, but not derivative transactions.

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This article by Simply Wall St is general in nature. 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.
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