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Should You Be Worried About Insider Transactions At Adamas Pharmaceuticals, Inc. (NASDAQ:ADMS)?

Neil Montgomery

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We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Adamas Pharmaceuticals, Inc. (NASDAQ:ADMS).

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

Check out our latest analysis for Adamas Pharmaceuticals

The Last 12 Months Of Insider Transactions At Adamas Pharmaceuticals

Over the last year, we can see that the biggest insider sale was by Co-Founder Gregory Went for US$117k worth of shares, at about US$25.75 per share. That is hardly a positive sign, even though it took place above the latest price (US$8.99). So it may not shed much light on insider confidence at current levels. Notably Gregory Went was also the biggest buyer, having purchased US$50k worth of shares.

In total, Adamas Pharmaceuticals insiders sold more than they bought over the last year. The average sell price was around US$23.98. Insider selling doesn’t make us excited to buy. However, we do note that the average sale price was significantly higher than the current share price (which is US$8.99). You can see a visual depiction of insider transactions (by 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!

NASDAQGM:ADMS Insider Trading February 12th 19

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Have Adamas Pharmaceuticals Insiders Traded Recently?

In the last three months, insiders sold US$4.9k worth of shares. That’s not much at all. The net selling is so small that it’s hard to draw any conclusions from these recent transactions.

Insider Ownership of Adamas Pharmaceuticals

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. From looking at our data, insiders own US$4.3m worth of Adamas Pharmaceuticals stock, about 1.7% of the company. We consider this fairly low insider ownership.

What Might The Insider Transactions At Adamas Pharmaceuticals Tell Us?

Insider selling has just outweighed insider buying in the last three months. But the difference is small, and thus, not concerning. We’re a little cautious about the insider selling at Adamas Pharmaceuticals. And we’re not picking up on high enough insider ownership to give us any comfort. 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, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.