Multiple insiders secured a larger position in Lululemon Athletica Inc. (NASDAQ:LULU) shares over the last 12 months. This is reassuring as this suggests that insiders have increased optimism about the company's prospects.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Lululemon Athletica Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Independent Chair of the Board Martha A. Morfitt bought US$1.4m worth of shares at a price of US$390 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$383). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

In the last twelve months insiders purchased 7.70k shares for US$2.5m. But they sold 2.79k shares for US$1.1m. In total, Lululemon Athletica insiders bought more than they sold over the last year. They paid about US$322 on average. It is certainly positive to see that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. 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!

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.

Insiders At Lululemon Athletica Have Sold Stock Recently

The last three months saw significant insider selling at Lululemon Athletica. In total, insiders sold US$1.1m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership Of Lululemon Athletica

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Lululemon Athletica insiders own about US$1.7b worth of shares (which is 3.7% of the company). 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 Lululemon Athletica Insider Transactions Indicate?

Insiders sold Lululemon Athletica shares recently, but they didn't buy any. But we take heart from prior transactions. On top of that, insiders own a significant portion of the company. So we're happy to look past recent trading. Of course, the future is what matters most. So if you are interested in Lululemon Athletica, you should check out this free report on analyst forecasts for the company.

Of course Lululemon Athletica 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.