It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell FSD Pharma Inc. (CNSX:HUGE), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. 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.’
The Last 12 Months Of Insider Transactions At FSD Pharma
In the last twelve months, the biggest single sale by an insider was when Thomas Fairfull sold CA$8.5m worth of shares at a price of CA$0.64 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of CA$0.23. So it may not shed much light on insider confidence at current levels.
We note that in the last year insiders divested 14.49m shares for a total of CA$9.5m. In total, FSD Pharma insiders sold more than they bought over the last year. The average sell price was around CA$0.65. It is certainly not great to see that insiders have sold shares in the company. However, we do note that the average sale price was significantly higher than the current share price (which is CA$0.23). The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does FSD Pharma Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 8.4% of FSD Pharma shares, worth about CA$27m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The FSD Pharma Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded FSD Pharma shares in the last quarter. Still, the insider transactions at FSD Pharma in the last 12 months are not very heartening. But it’s good to see that insiders own shares in the company. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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.