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Quite a few insiders have dramatically grown their holdings in Neurogene Inc. (NASDAQ:NGNE) over the past 12 months. An insider's optimism about the company's prospects is a positive sign.
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.
Check out our latest analysis for Neurogene
The Last 12 Months Of Insider Transactions At Neurogene
In the last twelve months, the biggest single purchase by an insider was when Founder Rachel McMinn bought US$969k worth of shares at a price of US$20.40 per share. That means that even when the share price was higher than US$18.42 (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. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Neurogene insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders At Neurogene Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at Neurogene. Not only was there no selling that we can see, but they collectively bought US$1.5m worth of shares. This is a positive in our book as it implies some confidence.
Does Neurogene 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Neurogene insiders own about US$32m worth of shares. That equates to 12% 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 Neurogene Insider Transactions Indicate?
The recent insider purchases are heartening. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Given that insiders also own a fair bit of Neurogene we think they are probably pretty confident of a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 5 warning signs for Neurogene (3 shouldn't be ignored!) and we strongly recommend you look at these before investing.