We wouldn't blame Vital Farms, Inc. (NASDAQ:VITL) shareholders if they were a little worried about the fact that Matthew O'Hayer, the Founder & Executive Chairman recently netted about US$4.3m selling shares at an average price of US$21.50. However, that sale only accounted for 2.6% of their holding, so arguably it doesn't say much about their conviction.
The Last 12 Months Of Insider Transactions At Vital Farms
Notably, that recent sale by Matthew O'Hayer is the biggest insider sale of Vital Farms shares that we've seen in the last year. That means that even when the share price was below the current price of US$22.82, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 2.6% of Matthew O'Hayer's stake.
Insiders in Vital Farms didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Vital Farms 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 Vital Farms Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Vital Farms insiders own 32% of the company, worth about US$308m. 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 Do The Vital Farms Insider Transactions Indicate?
Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. But since Vital Farms is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about 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. At Simply Wall St, we found 2 warning signs for Vital Farms that deserve your attention before buying any shares.
Of course Vital Farms may not be the best stock to buy. So you may wish to see this free collection of high quality 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.