Root, Inc.'s (NASDAQ:ROOT) recent US$43m market cap decline means a loss of US$50k for insiders who bought this year
Insiders who acquired US$202k worth of Root, Inc.'s (NASDAQ:ROOT) stock at an average price of US$1.57 in the past 12 months may be dismayed by the recent 13% price decline. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth US$152k which is not ideal.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
See our latest analysis for Root
The Last 12 Months Of Insider Transactions At Root
Over the last year, we can see that the biggest insider purchase was by Chief Revenue & Operating Officer & Director Daniel Rosenthal for US$152k worth of shares, at about US$1.52 per share. That means that even when the share price was higher than US$1.18 (the recent price), an insider wanted to purchase shares. 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. 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.
Root insiders may have bought shares in the last year, but they didn't sell any. 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!
Root is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Root
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 20% of Root shares, worth about US$61m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Root Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Root shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Root and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Root. Case in point: We've spotted 3 warning signs for Root you should be aware of.
Of course Root may not be the best stock to buy. So you may wish to see this free collection of high quality 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.
