While elf Beauty, Inc. (NYSE:ELF) shareholders have enjoyed a good week with stock up 5.0%, they need remain vigorous. The fact that insiders chose to dispose of US$8.2m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.
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.
Check out our latest analysis for elf Beauty
The Last 12 Months Of Insider Transactions At elf Beauty
Over the last year, we can see that the biggest insider sale was by the Chairman, Tarang Amin, for US$2.2m worth of shares, at about US$26.48 per share. That means that an insider was selling shares at slightly below the current price (US$58.05). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don’t know for sure what they think of the stock price. We note that the biggest single sale was only 3.5% of Tarang Amin’s holding.
Insiders in elf Beauty didn’t buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like elf Beauty better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders At elf Beauty Have Sold Stock Recently
The last quarter saw substantial insider selling of elf Beauty shares. Specifically, Non-Employee Independent Director Lauren Levitan ditched US$225k worth of shares in that time, and we didn’t record any purchases whatever. the shares are not cheap.
Does elf Beauty Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivized to build the company for the long term. elf Beauty insiders own about US$124m worth of shares (which is 4.0% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The elf Beauty Insider Transactions Indicate?
An insider sold stock recently, but they haven’t been buying. And there weren’t any purchases to give us comfort, over the last year. But it is good to see that elf Beauty is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. While we like knowing what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. At Simply Wall St, we f 1 warning sign for elf Beauty that deserve your attention before buying any shares.
But note: elf Beauty 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, 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.