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 Foamix Pharmaceuticals Ltd. (NASDAQ:FOMX), 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. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Foamix Pharmaceuticals
Aharon Schwartz made the biggest insider purchase in the last 12 months. That single transaction was for US$438k worth of shares at a price of US$3.92 each. 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. That purchase may suggest an expectation of positive returns over the long term. Aharon Schwartz was the only individual insider to buy shares in the last twelve months.
You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Foamix Pharmaceuticals is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Foamix Pharmaceuticals Have Bought Stock Recently
There has been significantly more insider buying, than selling, at Foamix Pharmaceuticals, over the last three months. In total, Aharon Schwartz bought US$438k worth of shares in that time. But David Domzalski sold shares worth US$275. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
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. It appears that Foamix Pharmaceuticals insiders own 10% of the company, worth about US$19m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Foamix Pharmaceuticals Insiders?
It’s certainly positive to see the recent insider purchase. 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. When combined with notable insider ownership, these factors suggest Foamix Pharmaceuticals insiders are well aligned, and that they may think the share price is too low. 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 Foamix Pharmaceuticals 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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.