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We often see insiders buying up shares in companies that perform well over the long term. 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 ESSA Pharma Inc. (CVE:EPI).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the 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 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'.
ESSA Pharma Insider Transactions Over The Last Year
The Independent Director Franklin Berger made the biggest insider purchase in the last 12 months. That single transaction was for CA$1.6m worth of shares at a price of CA$7.16 each. So it's clear an insider wanted to buy, at around the current price, which is CA$8.93. 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. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for ESSA Pharma share holders is that insiders were buying at near the current price.
In the last twelve months ESSA Pharma insiders were buying shares, but not selling. You can see the insider transactions (by companies and 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!
ESSA Pharma is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at ESSA Pharma Have Bought Stock Recently
It's good to see that ESSA Pharma insiders have made notable investments in the company's shares. Not only was there no selling that we can see, but they collectively bought CA$115k worth of shares. This makes one think the business has some good points.
Does ESSA Pharma Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data indicates that ESSA Pharma insiders own about CA$9.1m worth of shares (which is 5.0% of the company). We do generally prefer see higher levels of insider ownership.
What Might The Insider Transactions At ESSA Pharma Tell Us?
It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that ESSA Pharma insiders are expecting a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing ESSA Pharma. For instance, we've identified 4 warning signs for ESSA Pharma (2 make us uncomfortable) you should be aware of.
Of course ESSA Pharma 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.
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. 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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