We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in ADMA Biologics, Inc. (NASDAQ:ADMA).
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, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. 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 ADMA Biologics
In the last twelve months, the biggest single purchase by an insider was when Co-Founder Adam Grossman bought US$350k worth of shares at a price of US$4.78 per share. That means that an insider was happy to buy shares at above the current price. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. That purchase may suggest an expectation of positive returns over the long term.
In the last twelve months insiders paid US$745k for 155.75k shares purchased. In total, ADMA Biologics insiders bought more than they sold over the last year. They paid about US$4.78 on average. I’d consider this a positive as it suggests insiders see value at around the current price, which is US$2.39. You can see a visual depiction of insider transactions 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!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. ADMA Biologics insiders own 10% of the company, currently worth about US$11m based on the recent share price. 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 ADMA Biologics Insiders?
It doesn’t really mean much that no insider has traded ADMA Biologics shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Overall we don’t see anything to make us think ADMA Biologics insiders are doubting the company, and they do own shares. Of course, the future is what matters most. So if you are interested in ADMA Biologics, you should check out this free report on analyst forecasts for the company.
Of course ADMA Biologics 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 email@example.com.