It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Beyond Air, Inc. (NASDAQ:XAIR).
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia 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'.
Beyond Air Insider Transactions Over The Last Year
CEO & Chairman of the Board Steven Lisi made the biggest insider purchase in the last 12 months. That single transaction was for US$697k worth of shares at a price of US$3.66 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$10.39. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
Happily, we note that in the last year insiders paid US$1.5m for 361.14k shares. But they sold 5992 shares for US$27k. In total, Beyond Air insiders bought more than they sold over the last year. The average buy price was around US$4.17. To my mind it is good that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. You can see a visual depiction of insider transactions (by individuals) 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!
Beyond Air is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Beyond Air Have Bought Stock Recently
There has been significantly more insider buying, than selling, at Beyond Air, over the last three months. In fact, two insiders bought US$727k worth of shares. But we did see CEO & Chairman of the Board Steven Lisi sell shares worth US$27k. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
Insider Ownership of Beyond Air
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. It appears that Beyond Air insiders own 22% of the company, worth about US$33m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Beyond Air Tell Us?
It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Beyond Air shares, given these transactions (along with notable insider ownership of the company). In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Beyond Air. While conducting our analysis, we found that Beyond Air has 2 warning signs and it would be unwise to ignore these.
Of course Beyond Air may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
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