Insiders who bought US$2.54m worth of Portillo's Inc. (NASDAQ:PTLO) stock in the last year recovered part of their losses as the stock rose by 10% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled US$1.1m since the time of purchase.

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.

The Last 12 Months Of Insider Transactions At Portillo's

In the last twelve months, the biggest single purchase by an insider was when Lead Independent Director Eugene Lee bought US$1.0m worth of shares at a price of US$7.68 per share. That means that even when the share price was higher than US$5.27 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While Portillo's insiders bought shares during the last year, they didn't sell. The average buy price was around US$8.99. These transactions suggest that insiders have considered the current price attractive. 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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. From our data, it seems that Portillo's insiders own 2.3% of the company, worth about US$9.1m. Whilst better than nothing, we're not overly impressed by these holdings.

What Might The Insider Transactions At Portillo's Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Portillo's insiders are doubting the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Portillo's. While conducting our analysis, we found that Portillo's has 1 warning sign and it would be unwise to ignore this.

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.

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.