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Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Eledon Pharmaceuticals, Inc. (NASDAQ:ELDN), that sends out a positive message to the company's shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Eledon Pharmaceuticals Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by CFO & Principal Accounting Officer Paul Little for US$89k worth of shares, at about US$8.87 per share. That means that even when the share price was higher than US$4.63 (the recent price), 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. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months Eledon Pharmaceuticals insiders were buying shares, but not selling. They paid about US$7.71 on average. This is nice to see since it implies that insiders might see value around current prices. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Eledon Pharmaceuticals is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Have Eledon Pharmaceuticals Insiders Traded Recently?
There was some insider buying at Eledon Pharmaceuticals over the last quarter. CEO & Non Independent Director David-Alexander Gros bought US$9.0k worth of shares in that time. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Our information indicates that Eledon Pharmaceuticals insiders own about US$83k worth of shares. This level of insider ownership is notably low, and not very encouraging.
So What Do The Eledon Pharmaceuticals Insider Transactions Indicate?
Our data shows a little insider buying, but no selling, in the last three months. That said, the purchases were not large. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Eledon Pharmaceuticals insiders are doubting the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Every company has risks, and we've spotted 5 warning signs for Eledon Pharmaceuticals (of which 2 are potentially serious!) you should know about.
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.
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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.