We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Chembio Diagnostics, Inc. (NASDAQ:CEMI).
Do Insider Transactions Matter?
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, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Chembio Diagnostics Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Director John Potthoff bought US$116k worth of shares at a price of US$5.81 per share. That means that an insider was happy to buy shares at around the current price. Of course they may have changed their mind. But this suggests they are optimistic. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then.
Happily, we note that in the last year insiders bought 35.00k shares for a total of US$217k. Overall, Chembio Diagnostics insiders were net buyers last year. They paid about US$6.21 on average. These transactions suggest that insiders have considered the current price of US$6.00 attractive. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Does Chembio Diagnostics Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Chembio Diagnostics insiders own about US$12m worth of shares. That equates to 11% 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 Chembio Diagnostics Insiders?
It doesn’t really mean much that no insider has traded Chembio Diagnostics shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Overall we don’t see anything to make us think Chembio Diagnostics insiders are doubting the company, and they do own shares. Of course, the future is what matters most. So if you are interested in Chembio Diagnostics, you should check out this free report on analyst forecasts for the company.
But note: Chembio Diagnostics may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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