EQL Pharma Gains 13%, Insider Trades Reap Benefit

EQL Pharma AB (publ) (STO:EQL) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 13%, resulting in a kr285m rise in the company's market capitalisation, translating to a gain of 77% on their initial investment. As a result, the stock they originally bought for kr5.35m is now worth kr9.45m.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for EQL Pharma

EQL Pharma Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when President & CEO Axel Schorling bought kr2.5m worth of shares at a price of kr47.05 per share. We do like to see buying, but this purchase was made at well below the current price of kr83.80. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

While EQL Pharma insiders bought shares during the last year, they didn't sell. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

EQL Pharma is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Insiders At EQL Pharma Have Bought Stock Recently

We saw some EQL Pharma insider buying shares in the last three months. Chief Operating Officer Martin Kristofferson purchased kr281k worth of shares in that period. We like it when there are only buyers, and no sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Does EQL Pharma 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From looking at our data, insiders own kr52m worth of EQL Pharma stock, about 2.1% of the company. But they may have an indirect interest through a corporate structure that we haven't picked up on. We prefer to see high levels of insider ownership.

What Might The Insider Transactions At EQL Pharma Tell Us?

It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. Given that insiders also own a fair bit of EQL Pharma we think they are probably pretty confident of a bright future. 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. You'd be interested to know, that we found 2 warning signs for EQL Pharma and we suggest you have a look.

But note: EQL 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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.