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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 we’ll take a look at whether insiders have been buying or selling shares in Immunomedics, Inc. (NASDAQ:IMMU).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. 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.’
Immunomedics Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Bryan Ball for US$67k worth of shares, at about US$13.35 per share. That means that an insider was happy to buy shares at around the current price of US$14.19. 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 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. In this case we’re pleased to report that the insider bought shares at close to current prices. The only individual insider to buy over the last year was Bryan Ball.
The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Does Immunomedics Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Our data isn’t picking up on much insider ownership at Immunomedics, though insiders do hold about US$287k worth of shares. But they may have an indirect interest through a corporate structure that we haven’t picked up on. This level of insider ownership is notably low, and not very encouraging.
So What Do The Immunomedics Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn’t make a profit over the last twelve months, which makes us cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Immunomedics insiders are expecting a bright future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Immunomedics 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.
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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.