Some of the losses seen by insiders who purchased AU$895k worth of Exopharm Limited (ASX:EX1) shares over the past year were recovered after the stock increased by 14% over the past week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at AU$443k 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 Exopharm
In the last twelve months, the biggest single purchase by an insider was when insider Carl Charalambous bought AU$700k worth of shares at a price of AU$0.42 per share. That means that an insider was happy to buy shares at above the current price of AU$0.17. 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. We note that Carl Charalambous was both the biggest buyer and the biggest seller.
Happily, we note that in the last year insiders paid AU$895k for 2.74m shares. But they sold 329.31k shares for AU$163k. In total, Exopharm insiders bought more than they sold over the last year. The average buy price was around AU$0.33. This is nice to see since it implies that insiders might see value around current prices. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Exopharm is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Exopharm Have Bought Stock Recently
It's good to see that Exopharm insiders have made notable investments in the company's shares. We can see that insider Carl Charalambous paid AU$178k for shares in the company. No-one sold. This makes one think the business has some good points.
Does Exopharm Boast High 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. Exopharm insiders own about AU$9.1m worth of shares. That equates to 35% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Exopharm Insider Transactions Indicate?
The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Given that insiders also own a fair bit of Exopharm we think they are probably pretty confident of a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Exopharm. When we did our research, we found 5 warning signs for Exopharm (2 are potentially serious!) that we believe deserve your full attention.
Of course Exopharm may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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, but not derivative transactions.
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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.