We note that the LendingTree, Inc. (NASDAQ: TREE) HR Director Jill Olmstead recently sold $91,000 worth of stock at $26.07 per share. While that wasn’t a lot of money, it was 69% of their stake, which is definitely not a good sign.
Our analysis indicates that TREE is potentially overvalued!
LendingTree insider trades over the past year
Over the past year, we can see that the largest insider buy was made by Independent Director Mark Ernst for US$657,000 worth of shares, at around US$65.67 per share. Clearly, an insider wanted to buy, even at a price above the current stock price (ie US$24.25). Although their perspective has changed since the purchase, it at least suggests that they have confidence in the future of the company. For us, it is very important to consider the price that insiders pay for the shares. It is generally more encouraging if they paid above the current price, as this suggests that they perceived value even at higher levels.
In the past twelve months, insiders have purchased 20,040 shares for $1,000,000. But they sold 350,000 shares for US$91,000. In total, LendingTree insiders bought more than they sold over the past year. The average purchase price was approximately US$50.33. I would view this as a positive as it suggests insiders are seeing value around the current price. You can see a visual representation of insider trading (by companies and individuals) over the past 12 months, below. If you click on the chart, you can see all individual trades including stock price, individual and date!
LendingTree isn’t the only stock insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider buying, might be just the ticket.
LendingTree Insider Ownership
Many investors like to check how much a company is owned by insiders. Usually, the higher the insider ownership, the more likely insiders will be incentivized to build the company for the long term. It appears that LendingTree insiders own 15% of the company, worth around $47 million. This level of insider ownership is good, but just short of being particularly noteworthy. This certainly suggests a reasonable degree of alignment.
So what does this data suggest about LendingTree insiders?
The recent insider buying is encouraging. And longer-term insider trading also gives us confidence. But we don’t feel the same way about the company making losses. Insiders likely see value in LendingTree stock, given these transactions (as well as notable insider ownership of the company). So these insider trades can help us build a thesis on the stock, but it’s also helpful to know the risks this company faces. To do this, you need to find out about the 2 warning signs we spotted with LendingTree (including 1 that should not be overlooked).
Sure, you might find a fantastic investment by looking elsewhere. So take a look at this free list of interesting companies.
For the purposes of this article, insiders are persons who report their transactions to the relevant regulatory body. We currently record open market transactions and private dispositions, but not derivative transactions.
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Find out if LendingTree is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.
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