Multiple insiders secured a larger position in loanDepot, Inc. (NYSE:LDI) shares over the last 12 months. This is reassuring as this suggests that insiders have increased optimism about the company's prospects.
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.
The Last 12 Months Of Insider Transactions At loanDepot
In the last twelve months, the biggest single purchase by an insider was when Founder & Executive Chairman Anthony Hsieh bought US$8.7m worth of shares at a price of US$6.93 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$1.85). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. 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 loanDepot insiders bought shares during the last year, they didn't sell. The average buy price was around US$4.91. This is nice to see since it implies that insiders might see value around current prices. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
loanDepot is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders At loanDepot Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at loanDepot. We can see that CEO, President & Director Frank Martell paid US$699k for shares in the company. No-one sold. This makes one think the business has some good points.
Insider Ownership Of loanDepot
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. We usually like to see fairly high levels of insider ownership. It appears that loanDepot insiders own 5.7% of the company, worth about US$33m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About loanDepot Insiders?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. Insiders likely see value in loanDepot shares, given these transactions (along with notable insider ownership of the company). 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. For example - loanDepot has 2 warning signs we think you should be aware of.
But note: loanDepot 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.
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