Despite the fact that Sprouts Farmers Market, Inc. (NASDAQ:SFM) stock rose 13% last week, insiders who sold US$16m worth of stock in the previous 12 months are likely to be better off. Selling at an average price of US$36.44, which is higher than the current price, may have been the wisest decision for these insiders as their investment would have been worth less now than when they sold.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
Sprouts Farmers Market Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the insider, Lawrence Molloy, sold US$2.9m worth of shares at a price of US$40.30 per share. That means that even when the share price was below the current price of US$59.63, an insider wanted to cash in some shares. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 41% of Lawrence Molloy's stake.
In the last year Sprouts Farmers Market insiders didn't buy any company stock. 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Sprouts Farmers Market Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at Sprouts Farmers Market. In total, Independent Director Douglas Rauch dumped US$200k 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 Of Sprouts Farmers Market
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Sprouts Farmers Market insiders own 0.4% of the company, worth about US$26m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Sprouts Farmers Market Insiders?
An insider sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. But since Sprouts Farmers Market is profitable and growing, we're not too worried by this. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! Of course, the future is what matters most. So if you are interested in Sprouts Farmers Market, you should check out this free report on analyst forecasts for the company.
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.