Insider Stock Buying Reaches US$19m On Desktop Metal
Quite a few insiders have dramatically grown their holdings in Desktop Metal, Inc. (NYSE:DM) over the past 12 months. An insider's optimism about the company's prospects is a positive sign.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
View our latest analysis for Desktop Metal
Desktop Metal Insider Transactions Over The Last Year
The insider Farhad Ebrahimi made the biggest insider purchase in the last 12 months. That single transaction was for US$19m worth of shares at a price of US$5.00 each. That means that an insider was happy to buy shares at above the current price of US$1.86. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Notably Farhad Ebrahimi was also the biggest seller.
Over the last year, we can see that insiders have bought 9.24m shares worth US$19m. On the other hand they divested 745.47k shares, for US$1.5m. In total, Desktop Metal insiders bought more than they sold over the last year. The average buy price was around US$2.03. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Desktop Metal Insiders Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at Desktop Metal. insider Farhad Ebrahimi spent US$19m on stock. But we did see insider selling worth US$1.5m. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Desktop Metal insiders own 19% of the company, currently worth about US$115m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Desktop Metal Insiders?
It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Desktop Metal insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 3 warning signs for Desktop Metal you should know about.
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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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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