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 ARCA biopharma, Inc. (NASDAQ:ABIO).
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 on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
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. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At ARCA biopharma
Joshua Makower made the biggest insider sale in the last 12 months. That single transaction was for US$731k worth of shares at a price of US$0.50 each. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$0.31. So it may not shed much light on insider confidence at current levels.
Over the last year, we note insiders sold 13.14m shares worth US$6.6m. In total, ARCA biopharma insiders sold more than they bought over the last year. The average sell price was around US$0.50. Insider selling doesn’t make us excited to buy. But the selling was at much higher prices than the current share price (US$0.31), so it probably doesn’t tell us a lot about the value on offer today. You can see a visual depiction of insider transactions over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Does ARCA biopharma Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. It’s great to see that ARCA biopharma insiders own 1.2% of the company, worth about US$48k. 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 ARCA biopharma Insiders?
The fact that there have been no ARCA biopharma insider transactions recently certainly doesn’t bother us. We don’t take much encouragement from the transactions by ARCA biopharma insiders. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. Of course, the future is what matters most. So if you are interested in ARCA biopharma, you should check out this free report on analyst forecasts for the company.
Of course ARCA biopharma may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.