It is not uncommon to see companies perform well in the years after insiders buy shares. 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 we'll take a look at whether insiders have been buying or selling shares in Profound Medical Corp. (TSE:PRN).
What Is Insider Buying?
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 don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Profound Medical Insider Transactions Over The Last Year
The CFO & Senior VP of Corporate Development, Aaron Davidson, made the biggest insider sale in the last 12 months. That single transaction was for CA$3.0m worth of shares at a price of CA$28.11 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (CA$25.17). So it may not shed much light on insider confidence at current levels. Aaron Davidson was the only individual insider to sell shares in the last twelve months.
The chart below shows insider transactions (by companies and 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.
Does Profound Medical Boast High 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. We usually like to see fairly high levels of insider ownership. Insiders own 1.3% of Profound Medical shares, worth about CA$6.9m, according to our data. Whilst better than nothing, we're not overly impressed by these holdings.
So What Do The Profound Medical Insider Transactions Indicate?
The fact that there have been no Profound Medical insider transactions recently certainly doesn't bother us. The insider transactions at Profound Medical are not inspiring us to buy. And we're not picking up on high enough insider ownership to give us any comfort. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. In terms of investment risks, we've identified 2 warning signs with Profound Medical and understanding these should be part of your investment process.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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