It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Wayfair Inc. (NYSE:W).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
Wayfair Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Lead Independent Director Michael Kumin bought US$3.2m worth of shares at a price of US$110 per share. That means that an insider was happy to buy shares at above the current price of US$101. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months insiders purchased 53350 shares for US$5.5m. But insiders sold 2246 shares worth US$258k. In the last twelve months there was more buying than selling by Wayfair insiders. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Wayfair Insiders Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at Wayfair. In total, Lead Independent Director Michael Kumin bought US$3.2m worth of shares in that time. But insiders only sold shares worth US$218k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Does Wayfair 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 Wayfair insiders own 33% of the company, worth about US$3.1b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Do The Wayfair Insider Transactions Indicate?
It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Wayfair. That's what I like to see! Of course, the future is what matters most. So if you are interested in Wayfair, you should check out this free report on analyst forecasts for the company.
Of course Wayfair 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, but not derivative transactions.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.