The recent 20% drop in Nerdy, Inc.'s (NYSE:NRDY) stock could come as a blow to insiders who purchased US$1.47m worth of stock at an average buy price of US$3.70 over the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth US$848.6k which is not ideal.
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.
Nerdy Insider Transactions Over The Last Year
The Founder Charles Cohn made the biggest insider purchase in the last 12 months. That single transaction was for US$196k worth of shares at a price of US$2.88 each. That means that even when the share price was higher than US$2.13 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Charles Cohn was the only individual insider to buy shares in the last twelve months.
Charles Cohn bought a total of 398.42k shares over the year at an average price of US$3.70. 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!
Nerdy is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders At Nerdy Have Sold Stock Recently
There was substantially more insider selling, than buying, of Nerdy shares over the last three months. We note insiders cashed in US$294k worth of shares. Meanwhile Founder Charles Cohn bought US$196k worth. We don't view these transactions as a positive sign.
Insider Ownership
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Nerdy insiders own about US$35m worth of shares. That equates to 8.5% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Nerdy Insiders?
The insider sales have outweighed the insider buying, at Nerdy, in the last three months. On the other hand, the insider transactions over the last year are encouraging. And insiders do own shares. So we're not overly bothered by recent selling. 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. Every company has risks, and we've spotted 4 warning signs for Nerdy you should know about.
But note: Nerdy 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.