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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 we’ll take a look at whether insiders have been buying or selling shares in Charles & Colvard, Ltd. (NASDAQ:CTHR).
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.
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. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
Charles & Colvard Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Director Benedetta Casamento for US$74k worth of shares, at about US$1.60 per share. So it’s clear an insider wanted to buy, even at a higher price than the current share price (being US$1.51). It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing 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.
Over the last year, we can see that insiders have bought 69000 shares worth US$105k. While Charles & Colvard insiders bought shares last year, they didn’t sell. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Charles & Colvard 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.
Insiders at Charles & Colvard Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Charles & Colvard. In total, insiders bought US$99k worth of shares in that time, and we didn’t record any sales whatsoever. That shows some optimism about the company’s future.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Insiders own 7.0% of Charles & Colvard shares, worth about US$3.0m, according to our data. We do generally prefer see higher levels of insider ownership.
So What Does This Data Suggest About Charles & Colvard Insiders?
It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. While the overall levels of insider ownership are below what we’d like to see, the history of transactions imply that Charles & Colvard insiders are reasonably well aligned, and optimistic for the future. Of course, the future is what matters most. So if you are interested in Charles & Colvard, you should check out this free report on analyst forecasts for the company.
Of course Charles & Colvard may not be the best stock to buy. So you may wish to see this free collection of high quality companies.For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
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 qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.