Have Insiders Sold Five Below Shares Recently?

We wouldn't blame Five Below, Inc. (NASDAQ:FIVE) shareholders if they were a little worried about the fact that Eric Specter, the Chief Administrative Officer recently netted about US$719k selling shares at an average price of US$131. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 9.0%.

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Five Below Insider Transactions Over The Last Year

Notably, that recent sale by Eric Specter is the biggest insider sale of Five Below shares that we've seen in the last year. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of US$133. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 9.0% of Eric Specter's holding.

In the last year Five Below insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

View our latest analysis for Five Below

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

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. Five Below insiders own about US$161m worth of shares (which is 2.2% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Five Below Insider Transactions Indicate?

Insiders sold Five Below shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. 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. While conducting our analysis, we found that Five Below has 2 warning signs and it would be unwise to ignore them.

But note: Five Below may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.