Despite the fact that Lifeway Foods, Inc. (NASDAQ:LWAY) stock rose 57% last week, insiders who sold US$2.5m worth of stock in the previous 12 months are likely to be better off. Selling at an average price of US$7.11, which is higher than the current price, may have been the best move for these insiders because their investment would have been worth less now than when they sold.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Lifeway Foods
The Last 12 Months Of Insider Transactions At Lifeway Foods
The insider, Ludmila Smolyansky, made the biggest insider sale in the last 12 months. That single transaction was for US$750k worth of shares at a price of US$6.00 each. That means that an insider was selling shares at slightly below the current price (US$14.68). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 6.9% of Ludmila Smolyansky's stake.
In total, Lifeway Foods insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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).
Insiders At Lifeway Foods Have Sold Stock Recently
The last quarter saw substantial insider selling of Lifeway Foods shares. In total, insider Edward Smolyansky dumped US$763k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
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. Lifeway Foods insiders own about US$94m worth of shares (which is 44% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Lifeway Foods Insiders?
An insider sold stock recently, but they haven't been buying. Zooming out, the longer term picture doesn't give us much comfort. But since Lifeway Foods is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Lifeway Foods. When we did our research, we found 2 warning signs for Lifeway Foods (1 is a bit unpleasant!) that we believe deserve your full attention.
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 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.