Trade Alert: Hoi Shuen Chau At ChromaDex Corporation (NASDAQ:CDXC), Has Just Spent US$52k Buying A Small Number of Shares
Whilst it may not be a huge deal, we thought it was good to see that Hoi Shuen Chau, who is a company insider, recently bought US$52k worth of stock, for US$1.67 per share. Although the purchase is not a big one, by either a percentage standpoint or absolute value, it can be seen as a good sign.
View our latest analysis for ChromaDex
ChromaDex Insider Transactions Over The Last Year
Notably, that recent purchase by insider Hoi Shuen Chau was not the only time they bought ChromaDex shares this year. Earlier in the year, they paid US$6.45 per share in a US$2.2m purchase. That means that even when the share price was higher than US$1.91 (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 ChromaDex insiders were buying shares, but not selling. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. ChromaDex insiders own about US$35m worth of shares. That equates to 27% of the company. 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 Do The ChromaDex Insider Transactions Indicate?
It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Given that insiders also own a fair bit of ChromaDex we think they are probably pretty confident of 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. While conducting our analysis, we found that ChromaDex has 2 warning signs and it would be unwise to ignore them.
Of course ChromaDex may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
