It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell DIAGNOS Inc. (CVE:ADK), 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 on the market. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 DIAGNOS
There wasn’t any very large single transaction over the last year, but we can still observe some trading.
Over the last year, we can see that insiders have bought 1.25m shares worth CA$66k. In total, DIAGNOS insiders bought more than they sold over the last year. Their average price was about CA$0.053. I’d consider this a positive as it suggests insiders see value at around the current price, which is CA$0.03. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Does DIAGNOS Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. 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, DIAGNOS insiders have about 1.6% of the stock, worth approximately CA$105k. 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.
So What Do The DIAGNOS Insider Transactions Indicate?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it’d be more encouraging if DIAGNOS insiders bought more shares in the company. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
Of course DIAGNOS may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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