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 before you buy or sell Flexion Therapeutics, Inc. (NASDAQ:FLXN), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
The Last 12 Months Of Insider Transactions At Flexion Therapeutics
Over the last year, we can see that the biggest insider purchase was by Co-Founder Michael Clayman for US$223k worth of shares, at about US$22.33 per share. That means that even when the share price was higher, an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. We generally consider it a positive if insiders have been buying on market, even above the current price.
Over the last year, we can see that insiders have bought 23.00k shares worth US$469k. In the last twelve months there was more buying than selling by Flexion Therapeutics insiders. Their average price was about US$20.38. I’d consider this a positive as it suggests insiders see value at around the current price, which is US$14.75. The chart below shows insider transactions (by 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!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does Flexion Therapeutics Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Our data indicates that Flexion Therapeutics insiders own about US$8.8m worth of shares (which is 1.6% of the company). Overall, this level of ownership isn’t that impressive, but it’s certainly better than nothing!
So What Does This Data Suggest About Flexion Therapeutics Insiders?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. But insiders have shown more of an appetite for the stock, over the last year. While we have no worries about the insider transactions, we’d be more comfortable if they owned more Flexion Therapeutics stock. Of course, the future is what matters most. So if you are interested in Flexion Therapeutics, you should check out this free report on analyst forecasts for the company.
But note: Flexion 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.
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