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 shareholders might well want to know whether insiders have been buying or selling shares in Pfenex Inc. (NYSEMKT:PFNX).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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. 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 Pfenex
In the last twelve months, the biggest single purchase by an insider was when Independent Director Phillip Schneider bought US$55k worth of shares at a price of US$4.99 per share. That means that an insider was happy to buy shares at above the current price. Their view may have changed since then, but at least it shows they felt optimistic at the time. We generally consider it a positive if insiders have been buying on market, even above the current price.
Happily, we note that in the last year insiders bought 26.00k shares for a total of US$130k. In the last twelve months there was more buying than selling by Pfenex insiders. Their average price was about US$4.98. I’d consider this a positive as it suggests insiders see value at around the current price, which is US$4.26. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership of Pfenex
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Our data suggests Pfenex insiders own 2.2% of the company, worth about US$2.9m. I generally like to see higher levels of ownership.
So What Do The Pfenex Insider Transactions Indicate?
The fact that there have been no Pfenex insider transactions recently certainly doesn’t bother us. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it’d be more encouraging if Pfenex insiders bought more shares in the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Pfenex.
Of course Pfenex 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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