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 SeaSpine Holdings Corporation (NASDAQ:SPNE).
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, rules govern insider transactions, including certain disclosures.
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 Colombia 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 SeaSpine Holdings
In the last twelve months, the biggest single sale by an insider was when Director John Henneman sold US$147k worth of shares at a price of US$14.72 per share. That means that even when the share price was below the current price of US$16.90, an insider wanted to cash in some shares. While their view may have changed since they sold, this isn’t a particularly bullish sign. When an insider sells below the current price, it does tend to make us wonder about the current valuation. It is worth noting that this sale was only 15.5% of John Henneman’s holding. The only individual insider seller over the last year was John Henneman.
You can see a visual depiction of insider transactions over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does SeaSpine Holdings Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It’s good to see that SeaSpine Holdings insiders own 5.8% of the company, worth about US$18m. This level of insider ownership is good but just short of being particularly stand-out, but it certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About SeaSpine Holdings Insiders?
An insider sold stock recently, but they haven’t been buying. Furthermore, transactions over the last twelve months dispel the notion that insiders won’t sell readily. When you combine this with the relatively low insider ownership, we are very cautious about the stock. We’d certainly think twice before buying! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for SeaSpine Holdings.
But note: SeaSpine Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.