Trade Alert: Peter Kamin At Psychemedics Corporation (NASDAQ:PMD), Has Just Spent US$268k Buying 7.6% More Shares
Investors who take an interest in Psychemedics Corporation (NASDAQ:PMD) should definitely note that insider Peter Kamin recently paid US$6.59 per share to buy US$268k worth of the stock. Although the purchase only increased their holding by 7.6%, it is still a solid purchase in our view.
See our latest analysis for Psychemedics
Psychemedics Insider Transactions Over The Last Year
In fact, the recent purchase by insider Peter Kamin was not their only acquisition of Psychemedics shares this year. They previously made an even bigger purchase of US$728k worth of shares at a price of US$6.84 per share. That means that an insider was happy to buy shares at above the current price of US$6.65. It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Peter Kamin was the only individual insider to buy during the last year.
Peter Kamin bought 238.63k shares over the last 12 months at an average price of US$6.80. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Psychemedics is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Psychemedics
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. Psychemedics insiders own about US$7.0m worth of shares. That equates to 19% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Psychemedics Insider Transactions Indicate?
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 during the last year, which makes us a little cautious. Insiders likely see value in Psychemedics shares, given these transactions (along with notable insider ownership of the company). 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. Every company has risks, and we've spotted 3 warning signs for Psychemedics (of which 2 shouldn't be ignored!) you should know about.
But note: Psychemedics 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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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.
