Markets

What the Insider Data Suggests About Sprouts Farmers Market, Inc. (SFM)

Recent insider trends for Sprouts Farmers Market, Inc. (NASDAQ:SFM) have caught the attention of investors. Patters in insider activity can help analysts formulate an outlook for a stock. In the case of SFM, the data has a lot to say about how the stock might perform going forward.

Institutions own 88.64% of Sprouts Farmers Market, Inc. (SFM)’s shares. The total value of these holdings, in millions, is $2,380. Among active positions in the latest quarter, 149 holders increased their positions by a total of 17.26 million shares, 137 holders decreased the positions by a total of 22.85 million shares, and 26 holders held their positions. This works out to a net decrease in ownership of 5.59 million shares, and suggests that institutions are feeling bearish about the stock.

Among new and sold out positions, 48 holders initiated new positions by a total of 7.14 million shares and 29 holders exited their positions by a total of 8.74 million shares. This nets out to a decrease of 1.6 million shares and is another bearish sign for SFM.

In the last three months, insiders executed a total of 4 trades. 1 of these were buys and 3 were sells. Insider ownership decreased by a total of 41448 shares, which suggests that SFM’s key executives are feeling less optimistic about the outlook for the stock. The data from the past twelve months tells a similar story: insiders executed 15 buys and 22 sells, and ownership decreased by a net of 182682 shares.



Comparing the number of shares sold short over time is a method analysts often use to get a reading on investor sentiment. Sprouts Farmers Market, Inc. (NASDAQ:SFM)’s short interest is 12.41 million shares, or 9.72% of the float. This represents an increase of 28% in the number of shares being shorted compared to the previous reading, and implies that investors felt more pessimistic about the stock during the past two weeks.

Given what the insider ownership patterns are saying, it makes sense to consider the technicals to see if these pieces of information reach the same conclusion about the outlook for SFM. A composite of 13 technical indicators that includes measures such as moving averages and momentum oscillators suggests that SFM is a Strong sell, which implies that SFM is expected to underperform the market based on prior trading patterns.

Conclusion




Institutional ownership trends suggest that the stock is cheap and the insider trading data indicates that insiders are bearish. Technical indicators (also) suggest that Sprouts Farmers Market, Inc. (NASDAQ:SFM) is overvalued.

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