The recent 35% drop in Xcel Brands, Inc.'s (NASDAQ:XELB) stock could come as a blow to insiders who purchased US$163.9k worth of stock at an average buy price of US$0.75 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$85.7k.
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.
Xcel Brands Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chairman Robert D'Loren for US$95k worth of shares, at about US$1.17 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$0.39). It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
Xcel Brands insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around US$0.75. 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 want to know exactly who sold, for how much, and when, simply click on the graph below!
See our latest analysis for Xcel Brands
Xcel Brands 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.
Xcel Brands Insiders Bought Stock Recently
We saw some Xcel Brands insider buying shares in the last three months. Chairman Robert D'Loren bought US$34k worth of shares in that time. It's good to see the insider buying, as well as the lack of recent sellers. However, in this case the amount invested recently is quite small.
Insider Ownership
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. Insiders own 28% of Xcel Brands shares, worth about US$830k. 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 Does This Data Suggest About Xcel Brands Insiders?
Our data shows a little insider buying, but no selling, in the last three months. The net investment is not enough to encourage us much. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think Xcel Brands insiders are doubting the company, and they do own shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Xcel Brands is showing 4 warning signs in our investment analysis, and 3 of those are a bit concerning...
Of course Xcel Brands 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 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.