Insiders Rewarded With US$275k Addition To Investment As Aardvark Therapeutics Stock Hits US$349m

Aardvark Therapeutics, Inc. (NASDAQ:AARD) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 18% resulting in a US$52m addition to the company’s market value. Put another way, the original US$730.4k acquisition is now worth US$1.01m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At Aardvark Therapeutics

The CEO, Secretary & Director Tien-Li Lee made the biggest insider purchase in the last 12 months. That single transaction was for US$265k worth of shares at a price of US$16.00 each. That means that an insider was happy to buy shares at around the current price of US$16.08. That means they have been optimistic about the company in the past, though they may have changed their mind. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. In this case we're pleased to report that the insider purchases were made at close to current prices.

While Aardvark Therapeutics insiders bought shares during the last year, they didn't sell. The average buy price was around US$11.68. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see the insider transactions (by companies and 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!

See our latest analysis for Aardvark Therapeutics

Aardvark Therapeutics is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Aardvark Therapeutics Insiders Bought Stock Recently

It's good to see that Aardvark Therapeutics insiders have made notable investments in the company's shares. In total, insiders bought US$306k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 15% of Aardvark Therapeutics shares, worth about US$51m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Aardvark Therapeutics Tell Us?

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 during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Aardvark Therapeutics insiders are well aligned, and that they may think the share price is too low. While it's good to be aware of 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. At Simply Wall St, we've found that Aardvark Therapeutics has 4 warning signs (2 are potentially serious!) that deserve your attention before going any further with your analysis.

But note: Aardvark Therapeutics 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.