It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell IMAC Holdings, Inc. (NASDAQ:IMAC), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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, 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. 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'.
IMAC Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the COO & Director, Matthew Wallis, for US$640k worth of shares, at about US$1.60 per share. That means that an insider was selling shares at slightly below the current price (US$2.10). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 19% of Matthew Wallis's holding. Matthew Wallis was the only individual insider to sell shares in the last twelve months.
In the last twelve months insiders purchased 5.75k shares for US$5.1k. But insiders sold 400.00k shares worth US$640k. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like IMAC Holdings better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at IMAC Holdings Have Sold Stock Recently
There was substantially more insider selling, than buying, of IMAC Holdings shares over the last three months. In that time, COO & Director Matthew Wallis dumped US$640k worth of shares. On the flip side, Independent Director Michael Pruitt spent US$1.2k on purchasing shares. Generally this level of net selling might be considered a bit bearish.
Does IMAC Holdings Boast High Insider Ownership?
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. From our data, it seems that IMAC Holdings insiders own 11% of the company, worth about US$6.1m. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Whilst better than nothing, we're not overly impressed by these holdings.
What Might The Insider Transactions At IMAC Holdings Tell Us?
Unfortunately, there has been more insider selling of IMAC Holdings stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. Insiders own relatively few shares in the company, and when you consider the sales, we're not particularly excited about the stock. So we're not rushing to buy, to say the least. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 5 warning signs for IMAC Holdings you should be aware of, and 1 of them is a bit unpleasant.
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 currently account for open market transactions and private dispositions, but not derivative transactions.
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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. 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.
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