Insiders At Sleep Number See Good Returns After Buying Stock Worth US$1.95m

Insiders who bought Sleep Number Corporation (NASDAQ:SNBR) stock lover the last 12 months are probably not as affected by last week’s 21% loss. Reason being, despite the recent loss, insiders original purchase value of US$1.95m is now worth US$2.29m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At Sleep Number

The insider Linda Kozlowski made the biggest insider purchase in the last 12 months. That single transaction was for US$751k worth of shares at a price of US$7.28 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$9.42. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Sleep Number insiders may have bought shares in the last year, but they didn't sell any. They paid about US$8.04 on average. We don't deny that it is nice to see insiders buying stock in the company. But we must note that the investments were made at well below today's share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

View our latest analysis for Sleep Number

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

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. We usually like to see fairly high levels of insider ownership. Insiders own 6.3% of Sleep Number shares, worth about US$15m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Sleep Number Insiders?

It doesn't really mean much that no insider has traded Sleep Number shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Sleep Number and their transactions don't cause us concern. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 3 warning signs we've spotted with Sleep Number (including 2 which are potentially serious).

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.