Have Insiders Been Buying Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) Shares?

It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Black Diamond Therapeutics, Inc. (NASDAQ:BDTX), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

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 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'.

See our latest analysis for Black Diamond Therapeutics

Black Diamond Therapeutics Insider Transactions Over The Last Year

The Independent Director Rajeev Shah made the biggest insider purchase in the last 12 months. That single transaction was for US$2.6m worth of shares at a price of US$19.00 each. We do like to see buying, but this purchase was made at well below the current price of US$33.34. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Black Diamond Therapeutics insiders may have bought shares in the last year, but they didn't sell any. 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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Black Diamond Therapeutics Insiders Bought Stock Recently

It's good to see that Black Diamond Therapeutics insiders have made notable investments in the company's shares. Chairman Robert Ingram spent US$152k on stock, and there wasn't any selling. This is a positive in our book as it implies some confidence.

Does Black Diamond Therapeutics Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 3.0% of Black Diamond Therapeutics shares, worth about US$36m. 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 Black Diamond Therapeutics Insiders?

It is good to see the recent insider purchase. 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 Black Diamond Therapeutics 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 Black Diamond Therapeutics. Be aware that Black Diamond Therapeutics is showing 2 warning signs in our investment analysis, and 1 of those is significant...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, but not derivative transactions.

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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. 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.
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