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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 4D pharma plc (LON:DDDD).
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
Check out our latest analysis for 4D pharma
The Last 12 Months Of Insider Transactions At 4D pharma
Over the last year, we can see that the biggest insider purchase was by CEO & Executive Director Duncan Peyton for UK£101k worth of shares, at about UK£0.99 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£0.93). 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. To us, it's very important to consider the price insiders pay for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
Happily, we note that in the last year insiders bought 275k shares for a total of UK£269k. While 4D pharma insiders bought shares last year, they didn't sell. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
4D pharma Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at 4D pharma. Not only was there no selling that we can see, but they collectively bought UK£210k worth of shares. This could be interpreted as suggesting a positive outlook.