Insider Sellers Might Regret Selling Neuronetics Shares at a Lower Price Than Current Market Value

Neuronetics, Inc.'s (NASDAQ:STIM) value has fallen 12% in the last week, but insiders who sold US$1.6m worth of stock over the last year have had less success. Insiders might have been better off holding onto their shares, given that the average selling price of US$3.84 is still below the current share price.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Neuronetics

In the last twelve months, the biggest single sale by an insider was when the Executive VP, Stephen Furlong, sold US$853k worth of shares at a price of US$4.27 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of US$3.38. So it is hard to draw any strong conclusion from it.

In the last twelve months insiders purchased 309.17k shares for US$260k. On the other hand they divested 420.54k shares, for US$1.6m. All up, insiders sold more shares in Neuronetics than they bought, over the last year. The average sell price was around US$3.84. 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$3.38. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Check out our latest analysis for Neuronetics

I will like Neuronetics better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insiders At Neuronetics Have Sold Stock Recently

The last three months saw significant insider selling at Neuronetics. Specifically, Executive VP Stephen Furlong ditched US$853k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Does Neuronetics Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 5.9% of Neuronetics shares, worth about US$14m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Neuronetics Insiders?

An insider sold stock recently, but they haven't been buying. Zooming out, the longer term picture doesn't give us much comfort. Insiders own shares, but we're still pretty cautious, given the history of sales. We'd practice some caution before buying! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 4 warning signs for Neuronetics you should be aware of, and 2 of them shouldn't be ignored.

But note: Neuronetics 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.

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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.