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Over the last year, a good number of insiders have significantly increased their holdings in Summit Therapeutics Inc. (NASDAQ:SMMT). This is encouraging because it indicates that insiders are more optimistic about the company's prospects.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for Summit Therapeutics
Summit Therapeutics Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Executive Chairman Robert Duggan for US$60m worth of shares, at about US$5.24 per share. That means that an insider was happy to buy shares at above the current price of US$2.21. 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. 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.
While Summit Therapeutics insiders bought shares during the last year, they didn't sell. You can see a visual depiction of insider transactions (by companies and 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!
Summit Therapeutics is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Summit Therapeutics
For a common shareholder, it is worth checking how many shares are held by company 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. Summit Therapeutics insiders own about US$156m worth of shares (which is 72% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Summit Therapeutics Tell Us?
There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. It would be great to see more insider buying, but overall it seems like Summit Therapeutics insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Summit Therapeutics. For instance, we've identified 5 warning signs for Summit Therapeutics (2 don't sit too well with us) you should be aware of.