Last year, many Planet Fitness Co., Ltd. (NYSE:PLNT) It may have caught the attention of shareholders that insiders sold a significant amount of their shares in the company. There are many explanations for insider selling, so when assessing insider trading, it’s usually more helpful to know whether insiders have been buying. However, if a large number of insiders have been selling, shareholders should investigate further.
Insider trading isn’t the most important thing when it comes to long-term investing, but logically you should pay some attention to whether insiders are buying or selling shares.
Check out our latest analysis for Planet Fitness.
Planet Fitness insider transactions over the past year
Director Christopher Rondeau made the biggest insider sale in the past 12 months. In this one trade of his, US$2.4 million worth of shares were traded at US$66.55 per share. This means that an insider was selling shares at just below the current price (US$69.34). If an insider sold below the current price, it suggests they thought the downside was fair. With that in mind, I’m curious what they think about the recent (higher) valuation. However, while insider selling can sometimes be discouraging, it can only be a weak signal. Note that the single largest sale was just his 40% of Christopher Rondeau’s holdings.
Happily, we found that insiders paid US$1.3m for 20,000 shares in the last year. Meanwhile, they sold 36.53 thousand shares for USD 2.4 million. In total, Planet Fitness insiders sold more than they bought in the last year. You can see a visual representation of the insider transactions (by companies and individuals) over the last 12 months, below. Click on the chart to see all individual trades, including stock price, individual, and date.
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Planet Fitness officials sell stock
We’ve seen more insider selling than insider buying at Planet Fitness lately. We note that Director Christopher Rondeau liquidated US$2.4m worth of shares into cash. Meanwhile, interim CEO and director Craig Benson purchased the equivalent of US$681,000. We could argue that these trades could suggest that some insiders feel the stock isn’t cheap, as the selling actually outweighs the buying.
Does Planet Fitness boast high insider ownership?
Another way to test the alignment between a company’s leaders and other shareholders is to look at the number of shares they own. We think it’s a good sign if insiders own a significant number of shares in the company. It appears that Planet Fitness insiders own 0.3% of the company’s shares, worth about US$16m. This is a strong but not significant level of insider ownership, but it’s enough to indicate some alignment between management and smaller shareholders.
So what do Planet Fitness’ insider transactions tell us?
Unfortunately, there were more insider sells in Planet Fitness stock than buys over the past three months. Zooming out, the long-term outlook is less reassuring. On the plus side, Planet Fitness is profitable and its profits are increasing. Insiders own shares, but they don’t own a ton of shares and they keep selling them. No need to rush to buy. So while it’s useful to know what insiders are doing in terms of buying and selling, it’s also useful to know the risks facing a particular company.Every company has risks, and we found that 3 warning signs for Planet Fitness (Two of which are a bit concerning!) You should know.
However, please note: Planet Fitness may not be the best stock to buy.So take a look at this free List of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are individuals who report their transactions to the relevant regulatory body. The Company currently only accounts for open market transactions and private dispositions of direct profits, and does not account for derivative transactions or indirect profits.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.