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 we’ll take a look at whether insiders have been buying or selling shares in Provention Bio, Inc. (NASDAQ:PRVB).
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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Colombia 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’.
Provention Bio Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Peter Appel for US$3.0m worth of shares, at about US$4.00 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. It’s not at all bad to see insiders buy shares at or above current prices.
Over the last year, we can see that insiders have bought 973.11k shares worth US$3.8m. In the last twelve months there was more buying than selling by Provention Bio insiders. Their average price was about US$3.93. I’d consider this a positive as it suggests insiders see value at around the current price, which is US$1.94. 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!
Provention Bio is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Provention Bio Insiders Bought Stock Recently
Over the last quarter, Provention Bio insiders have spent a meaningful amount on shares. In total, insiders bought US$116k worth of shares in that time, and we didn’t record any sales whatsoever. That shows some optimism about the company’s future.
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. Provention Bio insiders own 22% of the company, currently worth about US$15m 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 Provention Bio Insiders?
It’s certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. Given that insiders also own a fair bit of Provention Bio we think they are probably pretty confident of a bright future. Along with insider transactions, I recommend checking if Provention Bio is growing revenue. This free chart of historic revenue and earnings should make that easy.
Of course Provention Bio 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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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 firstname.lastname@example.org.