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We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 before you buy or sell Axsome Therapeutics, Inc. (NASDAQ:AXSM), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Axsome Therapeutics Insider Transactions Over The Last Year
Director Mark Coleman made the biggest insider purchase in the last 12 months. That single transaction was for US$100k worth of shares at a price of US$21.44 each. That implies that an insider found the current price of US$23.22 per share to be enticing. 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 Axsome Therapeutics insiders decided to buy shares at close to current prices.
Happily, we note that in the last year insiders bought 49650 shares for a total of US$404k. Axsome Therapeutics may have bought shares in the last year, but they didn’t sell any. They paid about US$8.14 on average. 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 want to know exactly who sold, for how much, and when, simply click on the graph below!
Axsome Therapeutics is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Axsome Therapeutics Insiders Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Axsome Therapeutics. In total, insiders bought US$308k worth of shares in that time, and we didn’t record any sales whatsoever. This makes one think the business has some good points.
Does Axsome Therapeutics Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company 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. It appears that Axsome Therapeutics insiders own 5.2% of the company, worth about US$40m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Do The Axsome Therapeutics Insider Transactions Indicate?
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. Given that insiders also own a fair bit of Axsome Therapeutics we think they are probably pretty confident of a bright future. Of course, the future is what matters most. So if you are interested in Axsome Therapeutics, you should check out this free report on analyst forecasts for the company.
Of course Axsome Therapeutics may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
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. Thank you for reading.