We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in e-therapeutics plc (LON:ETX).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
View our latest analysis for e-therapeutics
The Last 12 Months Of Insider Transactions At e-therapeutics
The CEO & Executive Chairman Ahmad Mortazavi made the biggest insider purchase in the last 12 months. That single transaction was for UK£200k worth of shares at a price of UK£0.12 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of UK£0.17. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
e-therapeutics 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. By clicking on the graph below, you can see the precise details of each insider transaction!
e-therapeutics 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.
Does e-therapeutics 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. e-therapeutics insiders own about UK£39m worth of shares (which is 53% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.