We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Cidara Therapeutics, Inc. (NASDAQ:CDTX), you may well want to know whether insiders have been buying or selling.
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 in the company. 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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
The Last 12 Months Of Insider Transactions At Cidara Therapeutics
Over the last year, we can see that the biggest insider purchase was by President Jeffrey Stein for US$100k worth of shares, at about US$1.91 per share. Even though the purchase was made at a significantly lower price than the recent price (US$2.64), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
Over the last year, we can see that insiders have bought 82.50k shares worth US$157k. On the other hand they divested 16120 shares, for US$34k. In the last twelve months there was more buying than selling by Cidara Therapeutics insiders. You can see a visual depiction of insider transactions (by individuals) 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!
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.
Cidara Therapeutics Insiders Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at Cidara Therapeutics. In total, two insiders bought US$157k worth of shares in that time. But we did see insider selling worth US$22k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Does Cidara Therapeutics Boast High Insider Ownership?
Many investors like to check how much of a company is owned by 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. Based on our data, Cidara Therapeutics insiders have about 2.6% of the stock, worth approximately US$2.3m. But they may have an indirect interest through a corporate structure that we haven't picked up on. I generally like to see higher levels of ownership.
What Might The Insider Transactions At Cidara Therapeutics Tell Us?
It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Cidara Therapeutics insiders are expecting a bright 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.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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