We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 shareholders might well want to know whether insiders have been buying or selling shares in Proteostasis Therapeutics, Inc. (NASDAQ:PTI).
What Is Insider Buying?
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 don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
Proteostasis Therapeutics Insider Transactions Over The Last Year
Director Franklin Berger made the biggest insider purchase in the last 12 months. That single transaction was for US$270k worth of shares at a price of US$6.75 each. That means that an insider was happy to buy shares at above the current price. 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. Franklin Berger was the only individual insider to buy shares in the last twelve months.
The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insider Ownership of Proteostasis 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. I reckon it’s a good sign if insiders own a significant number of shares in the company. Our data suggests Proteostasis Therapeutics insiders own 1.1% of the company, worth about US$2.4m. However, it’s possible that insiders might have an indirect interest through a more complex structure. We prefer to see high levels of insider ownership.
What Might The Insider Transactions At Proteostasis Therapeutics Tell Us?
It doesn’t really mean much that no insider has traded Proteostasis Therapeutics shares in the last quarter. However, our analysis of transactions over the last year is heartening. While we have no worries about the insider transactions, we’d be more comfortable if they owned more Proteostasis Therapeutics stock. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Proteostasis Therapeutics.
But note: Proteostasis 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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