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 before you buy or sell Cambrex Corporation (NYSE:CBM), you may well want to know whether insiders have been buying or selling.
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.
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. 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.’
Cambrex Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when President Steven Klosk sold US$5.0m worth of shares at a price of US$63.23 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$42.73. So it may not tell us anything about how insiders feel about the current share price.
In the last twelve months insiders netted US$8.8m for 155.50k shares sold. In total, Cambrex insiders sold more than they bought over the last year. The sellers received a price of around US$56.67, on average. It is certainly not great to see that insiders have sold shares in the company. But the selling was at much higher prices than the current share price (US$42.73), so it probably doesn’t tell us a lot about the value on offer today. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does Cambrex Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. Cambrex insiders own about US$15m worth of shares. That equates to 1.1% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Cambrex Tell Us?
It doesn’t really mean much that no insider has traded Cambrex shares in the last quarter. We don’t take much encouragement from the transactions by Cambrex insiders. But it’s good to see that insiders own shares in the company. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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 firstname.lastname@example.org.