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We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 before you buy or sell AxoGen, Inc. (NASDAQ:AXGN), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
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 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’.
The Last 12 Months Of Insider Transactions At AxoGen
In the last twelve months, the biggest single sale by an insider was when the Chairman, Karen Zaderej, sold US$830k worth of shares at a price of US$33.42 per share. While we don’t usually like to see insider selling, it’s more concerning if the sales take price at a lower price. The silver lining is that this sell-down took place above the latest price (US$19.70). So it is hard to draw any strong conclusion from it.
In total, AxoGen insiders sold more than they bought over the last year. They sold for an average price of about US$29.65. Insider selling doesn’t make us excited to buy. But we note that the selling, on average, was at well above the recently traded price of US$19.70. 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!
AxoGen Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of AxoGen shares over the last three months. In total, David Hansen sold US$453k worth of shares in that time. On the flip side, Amy McBride-Wendell spent US$101k on purchasing shares. Because the selling vastly outweighs the buying, we’d say this is a somewhat bearish sign.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that AxoGen insiders own 3.1% of the company, worth about US$24m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The AxoGen Insider Transactions Indicate?
The insider sales have outweighed the insider buying, at AxoGen, in the last three months. And our longer term analysis of insider transactions didn’t bring confidence, either. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. We’re in no rush to buy! Of course, the future is what matters most. So if you are interested in AxoGen, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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.