It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Avadel Pharmaceuticals plc's (NASDAQ:AVDL) case, it's fantastic news for shareholders.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
Avadel Pharmaceuticals Insider Transactions Over The Last Year
In fact, the recent purchase by Eric Ende was the biggest purchase of Avadel Pharmaceuticals shares made by an insider individual in the last twelve months, according to our records. That means that an insider was happy to buy shares at around the current price of US$7.99. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider purchases were made at close to current prices.
While Avadel Pharmaceuticals insiders bought shares during the last year, they didn't sell. They paid about US$2.46 on average. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Avadel Pharmaceuticals Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at Avadel Pharmaceuticals. Independent Director Eric Ende spent US$156k on stock, and there wasn't any selling. This could be interpreted as suggesting a positive outlook.
Insider Ownership Of Avadel Pharmaceuticals
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Avadel Pharmaceuticals insiders own about US$35m worth of shares. That equates to 7.1% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Avadel Pharmaceuticals Insiders?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Avadel Pharmaceuticals insiders are well aligned, and that they may think the share price is too low. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 4 warning signs for Avadel Pharmaceuticals (of which 2 are a bit unpleasant!) you should know about.
Of course Avadel Pharmaceuticals may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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