We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Tetra Bio-Pharma Inc. (CVE:TBP).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. 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.
See our latest analysis for Tetra Bio-Pharma
The Last 12 Months Of Insider Transactions At Tetra Bio-Pharma
In the last twelve months, the biggest single purchase by an insider was when Independent Chairman of the Board William Cheliak bought CA$807k worth of shares at a price of CA$0.55 per share. That means that an insider was happy to buy shares at above the current price of CA$0.50. 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. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months Tetra Bio-Pharma insiders were buying shares, but not selling. They paid about CA$0.49 on average. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Tetra Bio-Pharma is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Have Tetra Bio-Pharma Insiders Traded Recently?
Independent Chairman of the Board William Cheliak bought just CA$1.4k worth of shares in that time. That's not much at all. Overall, we don't think these recent trades are particularly informative, one way or the other.
Insider Ownership of Tetra Bio-Pharma
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data indicates that Tetra Bio-Pharma insiders own about CA$5.4m worth of shares (which is 5.1% of the company). We do generally prefer see higher levels of insider ownership.
So What Does This Data Suggest About Tetra Bio-Pharma Insiders?
Insider purchases may have been minimal, in the last three months, but there was no selling at all. The net investment is not enough to encourage us much. However, our analysis of transactions over the last year is heartening. The transactions are fine but it'd be more encouraging if Tetra Bio-Pharma insiders bought more shares in the company. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.
But note: Tetra Bio-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.
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
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