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 Iterum Therapeutics plc (NASDAQ:ITRM).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
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.’
The Last 12 Months Of Insider Transactions At Iterum Therapeutics
Over the last year, we can see that the biggest insider purchase was by Director David Kelly for US$63k worth of shares, at about US$6.29 per share. So it’s clear an insider wanted to buy, at around 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. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then.
Over the last year, we can see that insiders have bought 23.00k shares worth US$218k. In the last twelve months there was more buying than selling by Iterum Therapeutics insiders. Their average price was about US$9.46. These transactions suggest that insiders have considered the current price of US$7.00 attractive. The chart below shows insider transactions over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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.
Iterum Therapeutics Insiders Bought Stock Recently
Over the last quarter, Iterum Therapeutics insiders have spent a meaningful amount on shares. David Kelly spent US$63k on stock, and there wasn’t any selling. This makes one think the business has some good points.
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. Iterum Therapeutics insiders own 3.5% of the company, currently worth about US$3.5m 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 Iterum Therapeutics Insiders?
It’s certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn’t make a profit over the last twelve months, which makes us cautious. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Iterum Therapeutics stock. Of course, the future is what matters most. So if you are interested in Iterum Therapeutics, you should check out this free report on analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.