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We often see insiders buying up shares in
companies that perform well over the long term. Unfortunately,
there are also plenty of examples of share prices declining
precipitously after insiders have sold shares. So before you buy or
sell Phivida Holdings Inc. (CNSX:VIDA), you may
well want to know whether insiders have been buying or selling.
It's quite normal to see company insiders, such
as board members, trading in company stock, from time to time.
However, such insiders must disclose their trading activities, and
not trade on inside information.
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. As Peter Lynch said, 'insiders might sell
their shares for any number of reasons, but they buy them for only
one: they think the price will rise.'
Check out our latest
analysis for Phivida Holdings
Over the last year, we can see that the biggest
insider purchase was by Director David Moon for CA$903k worth of
shares, at about CA$0.85 per share. So it's clear an insider wanted
to buy, even at a higher price than the current share price (being
CA$0.40). 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. We always take careful note of the price insiders
pay when purchasing shares. It is generally more encouraging if
they paid above the current price, as it suggests they saw value,
even at higher levels.
Happily, we note that in the last year insiders
paid CA$1.1m for 1.4m shares. But insiders sold 2.1m shares worth
CA$1.5m. John Belfontaine divested 2.1m shares over the last 12
months at an average price of CA$0.70. The chart below shows
insider transactions (by individuals) over the last year. If you
want to know exactly who sold, for how much, and when, simply click
on the graph below!
If you are like me, then you will
not want to miss this free
list of growing companies
that insiders are buying.
At Phivida Holdings,over the last quarter, we
have observed quite a lot more insider buying than insider selling.
David Moon spent CA$993k on stock. But we did see John Belfontaine
sell shares worth CA$742k. The buying outweighs the selling, which
suggests that insiders may believe the company will do well in the
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. From looking at
our data, insiders own CA$1.4m worth of Phivida Holdings stock,
about 4.0% of the company. We prefer to see high levels of insider
It's certainly positive to see the recent insider
purchase. But we can't say the same for the transactions over the
last 12 months. The transactions over the last year don't give us
confidence, and nor does the fairly low insider ownership, but at
least the recent buying is a positive. Along with insider
transactions, I recommend checking if Phivida Holdings is growing
revenue. This free chart of historic revenue and
earnings should make that easy.
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
We aim to bring you long-term focused research
analysis driven by fundamental data. Note that our analysis may not
factor in the latest price-sensitive company announcements or
If you spot an error that warrants correction, please contact
the editor at
[email protected] This article by Simply Wall St
is general in nature. It does not constitute a recommendation to
buy or sell any stock, and does not take account of your
objectives, or your financial situation. Simply Wall St has no
position in the stocks mentioned. Thank you for reading.