Insiders who bought US$4.0m worth of Franchise Group, Inc. (NASDAQ:FRG) stock in the last year recovered part of their losses as the stock rose by 11% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled US$89k since the time of purchase.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Franchise Group Insider Transactions Over The Last Year
The President Brian Kahn made the biggest insider purchase in the last 12 months. That single transaction was for US$3.8m worth of shares at a price of US$37.50 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$36.88). 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. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
In the last twelve months Franchise Group insiders were buying shares, but not selling. 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!
Franchise Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Are Franchise Group Insiders Buying Or Selling?
Executive Vice President Andrew Laurence bought just US$3.4k worth of shares in that time. That's not much at all. Looking at the net result, we don't think these recent trades shed much light on how insiders, as a group, are feeling about the company's prospects.
Insider Ownership Of Franchise Group
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. It's great to see that Franchise Group insiders own 24% of the company, worth about US$355m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Franchise Group Insider Transactions Indicate?
We note a that there has been a bit of insider buying recently (but no selling). Overall the buying isn't worth writing home about. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Franchise Group insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To that end, you should learn about the 3 warning signs we've spotted with Franchise Group (including 1 which is a bit concerning).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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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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