Lemonade, Inc. (NYSE:LMND) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 29% resulting in a US$388m addition to the company's market value. As a result, their original purchase of US$470.1k worth of stock is now worth US$713.1k.
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.
Lemonade Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when CFO & Principal Accounting Officer Timothy Bixby bought US$305k worth of shares at a price of US$15.51 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$23.77. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
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 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 undervalued small cap companies that insiders are buying.
Lemonade Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Lemonade shares. Specifically, insiders ditched US$71k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership Of Lemonade
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 Lemonade insiders own 5.7% of the company, worth about US$96m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Lemonade Tell Us?
Insiders sold Lemonade shares recently, but they didn't buy any. In contrast, they appear keener if you look at the last twelve months. And insiders do own shares. So the recent selling doesn't worry us too much. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - Lemonade has 2 warning signs we think you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
