The recent 10% drop in electroCore, Inc.'s (NASDAQ:ECOR) stock could come as a blow to insiders who purchased US$258k worth of stock at an average buy price of US$1.10 over the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth US$221k, which is not what they expected.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At electroCore
Over the last year, we can see that the biggest insider purchase was by Independent Director Trevor Moody for US$100k worth of shares, at about US$1.00 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$0.94). 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. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
electroCore insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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electroCore Insiders Bought Stock Recently
Over the last quarter, electroCore insiders have spent a meaningful amount on shares. In total, insiders bought US$200k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.
Insider Ownership of electroCore
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. Insiders own 11% of electroCore shares, worth about US$7.0m, according to our data. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
So What Do The electroCore Insider Transactions Indicate?
It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that electroCore insiders are reasonably well aligned, and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that electroCore is showing 5 warning signs in our investment analysis, and 1 of those can't be ignored...
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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.
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