Potential Novan, Inc. (NASDAQ:NOVN) shareholders may wish to note that insider Joseph Moglia recently bought US$430k worth of stock, paying US$0.43 for each share. That's a very solid buy in our book, and increased their holding by a noteworthy 26%.
The Last 12 Months Of Insider Transactions At Novan
In fact, the recent purchase by Joseph Moglia was the biggest purchase of Novan shares made by an insider individual in the last twelve months, according to our records. That implies that an insider found the current price of US$0.47 per share to be enticing. 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. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the Novan insiders decided to buy shares at close to current prices.
Novan insiders may have bought shares in the last year, but they didn't sell any. Their average price was about US$0.71. This is nice to see since it implies that insiders might see value around current prices. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Novan is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Novan 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. Our data indicates that Novan insiders own about US$2.4m worth of shares (which is 7.6% of the company). But they may have an indirect interest through a corporate structure that we haven't picked up on. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
What Might The Insider Transactions At Novan Tell Us?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss last year, which makes us a little cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Novan insiders are expecting a bright future. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 5 warning signs for Novan (1 is potentially serious!) that we believe deserve your full attention.
But note: Novan 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.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
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