We often see insiders buying up shares in companies that perform well over the long term. 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 Verrica Pharmaceuticals Inc. (NASDAQ:VRCA), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. 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.’
Verrica Pharmaceuticals Insider Transactions Over The Last Year
Chairman of the Board Paul Manning made the biggest insider purchase in the last 12 months. That single transaction was for US$4.5m worth of shares at a price of US$15.00 each. So it’s clear an insider wanted to buy, even at a higher 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. That purchase may suggest an expectation of positive returns over the long term.
Over the last year, we can see that insiders have bought 420.01k shares worth US$6.2m. Overall, Verrica Pharmaceuticals insiders were net buyers last year. The average buy price was around US$14.88. This is nice to see since it implies that insiders might see value around current prices (around US$8.78). The chart below shows insider transactions over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Verrica Pharmaceuticals is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Verrica Pharmaceuticals Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Verrica Pharmaceuticals. Specifically, Paul Manning bought US$993k worth of shares in that time, and we didn’t record any sales whatsoever. This could be interpreted as suggesting a positive outlook.
Does Verrica Pharmaceuticals Boast High 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. We usually like to see fairly high levels of insider ownership. Verrica Pharmaceuticals insiders own about US$118m worth of shares (which is 52% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Verrica Pharmaceuticals Tell Us?
It is good to see recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn’t make a profit over the last twelve months, which makes us cautious. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Verrica Pharmaceuticals. One for the watchlist, at least! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Verrica Pharmaceuticals.
But note: Verrica Pharmaceuticals 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.
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 firstname.lastname@example.org.