Have Insiders Been Buying Verastem, Inc. (NASDAQ:VSTM) Shares This Year?
We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Verastem, Inc. (NASDAQ:VSTM), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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’.
See our latest analysis for Verastem
Verastem Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when President Robert Forrester bought US$74k worth of shares at a price of US$7.00 per share. That means that even when the share price was higher, an insider wanted to purchase shares. 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. It’s not at all bad to see insiders buy shares at or above current prices.
Happily, we note that in the last year insiders bought 41.20k shares for a total of US$281k. Overall, Verastem insiders were net buyers last year. Their average price was about US$6.82. I’d consider this a positive as it suggests insiders see value at around the current price, which is US$3.44. You can see the insider transactions 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!
Verastem is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Verastem Have Bought Stock Recently
Over the last quarter, Verastem insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought US$218k worth of shares. That shows some optimism about the company’s future.
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It’s great to see that Verastem insiders own 3.3% of the company, worth about US$9.0m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Verastem Insiders?
It’s certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. But we don’t feel the same about the fact the company is making losses. 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 Verastem stock. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Verastem.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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 editorial-team@simplywallst.com.
