Insiders at Sally Beauty Holdings, Inc. (NYSE:SBH) must be relieved they sold stock as market valuation descends to US$1.5b

By
Simply Wall St
Published
May 20, 2022
NYSE:SBH
Source: Shutterstock

Insiders seem to have made the most of their holdings by selling US$319k worth of Sally Beauty Holdings, Inc. (NYSE:SBH) stock at an average sell price of US$20.72 during the past year. The company’s market cap plunged by US$120m after price dropped by 7.7% last week but insiders were able to limit their loss to an extent.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Sally Beauty Holdings

The Last 12 Months Of Insider Transactions At Sally Beauty Holdings

The insider Christian Brickman made the biggest insider purchase in the last 12 months. That single transaction was for US$189k worth of shares at a price of US$18.92 each. That means that an insider was happy to buy shares at above the current price of US$13.64. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. The only individual insider to buy over the last year was Christian Brickman.

Susan Mulder divested 15.40k shares over the last 12 months at an average price of US$20.72. 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!

insider-trading-volume
NYSE:SBH Insider Trading Volume May 20th 2022

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Does Sally Beauty Holdings Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Sally Beauty Holdings insiders own about US$10m worth of shares. That equates to 0.7% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Sally Beauty Holdings Insider Transactions Indicate?

The fact that there have been no Sally Beauty Holdings insider transactions recently certainly doesn't bother us. Still, the insider transactions at Sally Beauty Holdings in the last 12 months are not very heartening. But it's good to see that insiders own shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 2 warning signs for Sally Beauty Holdings (of which 1 is a bit unpleasant!) you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, but not derivative transactions.

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