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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 shareholders might well want to know whether insiders have been buying or selling shares in Sientra, Inc. (NASDAQ:SIEN).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Sientra Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Director & Advisor to MiraDry Business Keith Sullivan bought US$120k worth of shares at a price of US$5.75 per share. So it’s clear an insider wanted to buy, at around the current price, which is US$6.16. That means they have been optimistic about the company in the past, though they may have changed their mind. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today’s share price, as the discount to value may have narrowed with the rising price. Happily, the Sientra insiders decided to buy shares at close to current prices.
Over the last year, we can see that insiders have bought 46956 shares worth US$270k. But they sold 1852 for US$46k. In the last twelve months there was more buying than selling by Sientra insiders. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
Sientra Insiders Bought Stock Recently
It’s good to see that Sientra insiders have made notable investments in the company’s shares. Overall, three insiders shelled out US$270k for shares in the company — and none sold. This could be interpreted as suggesting a positive outlook.
Insider Ownership of Sientra
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 1.7% of Sientra shares, worth about US$5.2m, according to our data. We do generally prefer see higher levels of insider ownership.
So What Do The Sientra 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. 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 Sientra insiders are reasonably well aligned, and optimistic for the future. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Sientra.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
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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.