Despite a 6.0% gain in Arhaus, Inc.'s (NASDAQ:ARHS) stock price this week, shareholders shouldn't let up. In spite of the relatively cheap prices, insiders made the decision to sell US$1.2m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Check out our latest analysis for Arhaus
Arhaus Insider Transactions Over The Last Year
The Chief Retail Officer, Kathy Veltri, made the biggest insider sale in the last 12 months. That single transaction was for US$404k worth of shares at a price of US$6.05 each. That means that even when the share price was below the current price of US$13.92, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 10% of Kathy Veltri's holding. Kathy Veltri was the only individual insider to sell shares in the last twelve months.
Happily, we note that in the last year insiders paid US$1.2m for 185.50k shares. On the other hand they divested 206.20k shares, for US$1.2m. Kathy Veltri divested 206.20k shares over the last 12 months at an average price of US$6.02. 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!
I will like Arhaus better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Arhaus Boast High 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. Arhaus insiders own about US$658m worth of shares (which is 34% 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.
So What Do The Arhaus Insider Transactions Indicate?
The fact that there have been no Arhaus insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Arhaus, we can't say the same about the selling of shares. While we like knowing 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 1 warning sign for Arhaus you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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. 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.