Selling Lumos Pharma Shares at a Lower Price Than Current Market Value May Have Been a Costly Mistake for Insiders

Lumos Pharma, Inc.'s (NASDAQ:LUMO) stock price has dropped 13% in the previous week, but insiders who sold US$989k in stock over the past year have had less luck. Insiders would probably have been better off holding on to their shares given that the average selling price of US$4.06 is still lower than the current share price.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Lumos Pharma

Lumos Pharma Insider Transactions Over The Last Year

The insider, Daniel Farb, made the biggest insider sale in the last 12 months. That single transaction was for US$611k worth of shares at a price of US$4.17 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$2.65. So it may not shed much light on insider confidence at current levels. The only individual insider seller over the last year was Daniel Farb. Notably Daniel Farb was also the biggest buyer, having purchased US$455k worth of shares.

Daniel Farb sold a total of 243.34k shares over the year at an average price of US$4.06. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

I will like Lumos Pharma better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Does Lumos Pharma 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. Insiders own 15% of Lumos Pharma shares, worth about US$3.5m, according to our data. But they may have an indirect interest through a corporate structure that we haven't picked up on. We do generally prefer see higher levels of insider ownership.

What Might The Insider Transactions At Lumos Pharma Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. The insider transactions at Lumos Pharma are not inspiring us to buy. And we're not picking up on high enough insider ownership to give us any comfort. While we like knowing 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. To that end, you should learn about the 4 warning signs we've spotted with Lumos Pharma (including 1 which makes us a bit uncomfortable).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.