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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 shareholders might well want to know whether insiders have been buying or selling shares in Clinuvel Pharmaceuticals Limited (ASX:CUV).
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 don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
View our latest analysis for Clinuvel Pharmaceuticals
The Last 12 Months Of Insider Transactions At Clinuvel Pharmaceuticals
Over the last year, we can see that the biggest insider purchase was by Non-Executive Director Willem Blijdorp for AU$14m worth of shares, at about AU$10.00 per share. Although we like to see insider buying, we note that this large purchase was at significantly lower prices. The insider buying may not tell us much about how insiders feel about the current share price.
You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insider Ownership of Clinuvel Pharmaceuticals
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. It’s great to see that Clinuvel Pharmaceuticals insiders own 14% of the company, worth about AU$150m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Clinuvel Pharmaceuticals Insiders?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Clinuvel Pharmaceuticals insiders are reasonably well aligned (owning significant chunk of the company’s shares) and optimistic for the future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.