Insiders Re-Evaluate Their US$522.0k Stock Purchase As Larimar Therapeutics Falls To US$215m

The recent 14% drop in Larimar Therapeutics, Inc.'s (NASDAQ:LRMR) stock could come as a blow to insiders who purchased US$522.0k worth of stock at an average buy price of US$8.82 over the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth US$186.5k which is not ideal.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Larimar Therapeutics

Larimar Therapeutics Insider Transactions Over The Last Year

The Independent Director Thomas Hamilton made the biggest insider purchase in the last 12 months. That single transaction was for US$500k worth of shares at a price of US$8.74 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$3.15). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

While Larimar Therapeutics insiders bought shares during the last year, they didn't sell. 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!

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

Insider Ownership Of Larimar Therapeutics

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. Based on our data, Larimar Therapeutics insiders have about 1.2% of the stock, worth approximately US$2.5m. I generally like to see higher levels of ownership.

So What Do The Larimar Therapeutics Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Larimar Therapeutics shares in the last quarter. 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 Larimar Therapeutics stock. 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. For instance, we've identified 4 warning signs for Larimar Therapeutics (2 don't sit too well with us) you should be aware of.

Of course Larimar Therapeutics 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. 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.