Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Herbalife Ltd. (NYSE:HLF), it sends a favourable message to the company's shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Herbalife Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Independent Director Donal Mulligan for US$290k worth of shares, at about US$9.65 per share. That means that an insider was happy to buy shares at above the current price of US$7.77. 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.
While Herbalife insiders bought shares during the last year, they didn't sell. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
Check out our latest analysis for Herbalife
Herbalife 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 Herbalife Have Bought Stock Recently
Over the last quarter, Herbalife insiders have spent a meaningful amount on shares. We can see that insider Juan Mendoza paid US$61k for shares in the company. No-one sold. This could be interpreted as suggesting a positive outlook.
Insider Ownership Of Herbalife
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Herbalife insiders own 1.6% of the company, worth about US$13m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Herbalife Tell Us?
The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. Insiders likely see value in Herbalife shares, given these transactions (along with notable insider ownership of the company). In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Herbalife. To that end, you should learn about the 5 warning signs we've spotted with Herbalife (including 3 which are concerning) .
But note: Herbalife 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.