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The recent price decline of 35% in Next Science Limited's (ASX:NXS) stock may have disappointed insiders who bought US$404.9k worth of shares at an average price of US$0.39 in the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$134.5k.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
View our latest analysis for Next Science
Next Science Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Chairman Aileen Stockburger bought AU$220k worth of shares at a price of AU$0.42 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.13). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Next Science insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Next Science is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.
Insider Ownership Of Next Science
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Next Science insiders own about AU$11m worth of shares. That equates to 28% of the company. 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 Do The Next Science Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Next Science shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Next Science and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Next Science. When we did our research, we found 5 warning signs for Next Science (1 is a bit unpleasant!) that we believe deserve your full attention.