Don't Ignore The Insider Selling In Medifast
Anyone interested in Medifast, Inc. (NYSE:MED) should probably be aware that the Non-Executive Executive Chairman, Daniel Chard, recently divested US$226k worth of shares in the company, at an average price of US$11.85 each. However, the silver lining is that the sale only reduced their total holding by 8.7%, so we're hesitant to read anything much into it, on its own.
The Last 12 Months Of Insider Transactions At Medifast
In fact, the recent sale by Daniel Chard was the biggest sale of Medifast shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at around the current price of US$11.43. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
In the last twelve months insiders purchased 22.68k shares for US$242k. But insiders sold 19.09k shares worth US$226k. In the last twelve months there was more buying than selling by Medifast insiders. 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!
Check out our latest analysis for Medifast
Medifast is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From looking at our data, insiders own US$4.5m worth of Medifast stock, about 3.8% of the company. I generally like to see higher levels of ownership.
So What Do The Medifast Insider Transactions Indicate?
An insider sold Medifast shares recently, but they didn't buy any. On the other hand, the insider transactions over the last year are encouraging. Still, insiders don't own a great deal of the stock. So we can't be sure that insiders are optimistic. 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. At Simply Wall St, we found 2 warning signs for Medifast that deserve your attention before buying any shares.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.