Stock Analysis

Need To Know: Passage Bio, Inc. (NASDAQ:PASG) Insiders Have Been Buying Shares

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NasdaqGS:PASG
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We often see insiders buying up shares in companies that perform well over the long term. 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 shareholders might well want to know whether insiders have been buying or selling shares in Passage Bio, Inc. (NASDAQ:PASG).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.

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

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The Last 12 Months Of Insider Transactions At Passage Bio

Over the last year, we can see that the biggest insider purchase was by Independent Director Athena Countouriotis for US$160k worth of shares, at about US$18.00 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$26.43. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

While Passage Bio insiders bought shares during the last year, they didn't sell. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NasdaqGS:PASG Insider Trading Volume December 28th 2020

Passage Bio is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Does Passage Bio 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Passage Bio insiders own about US$100m worth of shares (which is 8.3% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Passage Bio Tell Us?

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. It would be great to see more insider buying, but overall it seems like Passage Bio insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. 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 3 warning signs we've spotted with Passage Bio (including 1 which is potentially serious).

Of course Passage Bio 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, but not derivative transactions.

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