It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell IRLAB Therapeutics AB (publ) (STO:IRLAB A), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'
IRLAB Therapeutics Insider Transactions Over The Last Year
Chief Financial Officer Viktor Siewertz made the biggest insider purchase in the last 12 months. That single transaction was for kr3.0m worth of shares at a price of kr62.40 each. That means that an insider was happy to buy shares at above the current price of kr40.80. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Happily, we note that in the last year insiders bought 58075 shares for a total of kr3.7m. In the last twelve months IRLAB Therapeutics insiders were buying shares, but not selling. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It appears that IRLAB Therapeutics insiders own 15% of the company, worth about kr251m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Do The IRLAB Therapeutics Insider Transactions Indicate?
The fact that there have been no IRLAB Therapeutics insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like IRLAB Therapeutics insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. Along with insider transactions, I recommend checking if IRLAB Therapeutics is growing revenue. This free chart of historic revenue and earnings should make that easy.
But note: IRLAB Therapeutics 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.
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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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.