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Should You Take Comfort From Insider Transactions At CymaBay Therapeutics, Inc. (NASDAQ:CBAY)?

Simply Wall St

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 shareholders might well want to know whether insiders have been buying or selling shares in CymaBay Therapeutics, Inc. (NASDAQ:CBAY).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.

View our latest analysis for CymaBay Therapeutics

CymaBay Therapeutics Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when President Sujal Shah bought US$65k worth of shares at a price of US$6.54 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$1.75). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. The only individual insider to buy over the last year was Sujal Shah.

Sujal Shah bought 20000 shares over the last 12 months at an average price of US$5.73. 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!

NasdaqGS:CBAY Recent Insider Trading, December 9th 2019

CymaBay Therapeutics is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. From what we can see in our data, insiders own only about US$706k worth of CymaBay Therapeutics shares. It's always possible we are missing something but from our data, it looks like insider ownership is minimal.

So What Do The CymaBay Therapeutics Insider Transactions Indicate?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. The net investment is not enough to encourage us much. But insiders have shown more of an appetite for the stock, over the last year. We'd like to see bigger individual holdings. However, we don't see anything to make us think CymaBay Therapeutics insiders are doubting the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for CymaBay Therapeutics.

Of course CymaBay Therapeutics 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.