We often see insiders buying up shares in
companies that perform well over the long term. The flip side of
that is that there are more than a few examples of insiders dumping
stock prior to a period of weak performance. So weâll take a look
at whether insiders have been buying or selling shares in
FSD Pharma Inc. (CNSX:HUGE).
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 equally, we would consider it foolish to ignore insider
transactions altogether. For example, a Colombia University
study found that âinsiders are more likely to engage
in open market purchases of their own companyâs stock when the firm
is about to reveal new agreements with customers and
See our latest analysis for
Over the last year, we can see that the biggest
insider sale was by Thomas Fairfull for CA$8.5m worth of shares, at
about CA$0.64 per share. While the sale doesnât make us feel
confident, we do note it was conducted at a price well above the
current share price, which is CA$0.27. So it may not shed much
light on insider confidence at current levels.
Over the last year, we note insiders sold 14.49m
shares worth CA$9.5m. All up, insiders sold more shares in FSD
Pharma than they bought, over the last year. The average sell price
was around CA$0.65. Insider selling doesnât make us excited to buy.
But the selling was at much higher prices than the current share
price (CA$0.27), so it probably doesnât tell us a lot about the
value on offer today. You can see a visual depiction of insider
transactions over the last 12 months, below. By clicking on the
graph below, you can see the precise details of each insider
For those who like to find winning
investments this free list of growing companies
with recent insider purchasing, could be just the ticket.
The last quarter saw substantial insider selling
of FSD Pharma shares. Specifically, insiders ditched CA$9.5m worth
of shares in that time, and we didnât record any purchases
whatsoever. In light of this itâs hard to argue that all the
directors think that the shares are a bargain.
Another way to test the alignment between the
leaders of a company and other shareholders is to look at how many
shares they own. A high insider ownership often makes company
leadership more mindful of shareholder interests. Itâs great to see
that FSD Pharma insiders own 7.7% of the company, worth about
CA$30m. Most shareholders would be happy to see this sort of
insider ownership, since it suggests that management incentives are
well aligned with other shareholders.
Insiders sold stock recently, but they havenât
been buying. And even if we look to the last year, we didnât see
any purchases. Insider ownership isnât particularly high, so this
analysis makes us cautious about the company. Weâre in no rush to
buy! Along with insider transactions, I recommend checking if FSD
Pharma is growing revenue. This free chart of historic revenue and
earnings should make that easy.
But note: FSD Pharma 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.
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
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