Insiders who bought Lemonade, Inc. (NYSE:LMND) stock in the last 12 months were richly rewarded last week. The company's market value increased by US$289m as a result of the stock's 22% gain over the same period. As a result, their original purchase of US$470.1k worth of stock is now worth US$681.3k.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
The Last 12 Months Of Insider Transactions At Lemonade
Over the last year, we can see that the biggest insider purchase was by CFO & Principal Accounting Officer Timothy Bixby for US$305k worth of shares, at about US$15.51 per share. We do like to see buying, but this purchase was made at well below the current price of US$22.71. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Timothy Bixby purchased 30.00k shares over the year. The average price per share was US$15.67. 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!
Lemonade is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.
Insiders At Lemonade Have Bought Stock Recently
There has been significantly more insider buying, than selling, at Lemonade, over the last three months. In total, CFO & Principal Accounting Officer Timothy Bixby bought US$305k worth of shares in that time. On the other hand, insiders netted US$54k by selling. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
Insider Ownership Of Lemonade
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 5.8% of Lemonade shares, worth about US$94m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Lemonade Insiders?
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Lemonade shares, given these transactions (along with notable insider ownership of 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. Case in point: We've spotted 1 warning sign for Lemonade you should be aware of.
But note: Lemonade may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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.
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