Read This Before Selling LifeMD, Inc. (NASDAQ:LFMD) Shares
More content below
LFMD
+8.10%
Simply Wall St
Mon, March 15, 2021, 3:40 AM
More content below
LFMD
+8.10%
We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in LifeMD, Inc. (NASDAQ:LFMD).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
See our latest analysis for LifeMD
The Last 12 Months Of Insider Transactions At LifeMD
In the last twelve months, the biggest single purchase by an insider was when Chief Operating Officer Brad Roberts bought US$103k worth of shares at a price of US$20.50 per share. That means that an insider was happy to buy shares at above the current price of US$18.14. 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.
While LifeMD insiders bought shares during the last year, they didn't sell. They paid about US$10.97 on average. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
insider-trading-volume
insider-trading-volume
LifeMD is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
LifeMD Insiders Bought Stock Recently
Over the last quarter, LifeMD insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought US$203k worth of shares. This could be interpreted as suggesting a positive outlook.
Insider Ownership of LifeMD
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that LifeMD insiders own 20% of the company, worth about US$95m. 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 Do The LifeMD Insider Transactions Indicate?
It is good to see recent purchasing. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest LifeMD insiders are well aligned, and that they may think the share price is too low. 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.
