Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Invitae Corporation (NYSE:NVTA).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. 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.’
Invitae Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Co-Founder, Sean George, for US$442k worth of shares, at about US$18.21 per share. That means that even when the share price was below the current price of US$21.21, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don’t know for sure what they think of the stock price. It is worth noting that this sale was only 7% of Sean George’s holding.
Over the last year, we note insiders sold 64708 shares worth US$1.1m. In the last year Invitae insiders didn’t buy any company stock. You can see the insider transactions (by 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!
I will like Invitae better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Invitae Insiders Are Selling The Stock
The last three months saw significant insider selling at Invitae. In total, insiders sold US$981k worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
Does Invitae 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. Invitae insiders own about US$87m worth of shares. That equates to 4.5% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Invitae Insider Transactions Indicate?
Insiders sold Invitae shares recently, but they didn’t buy any. And there weren’t any purchases to give us comfort, over the last year. While insiders do own shares, they don’t own a heap, and they have been selling. We’re in no rush to buy! Of course, the future is what matters most. So if you are interested in Invitae, you should check out this free report on analyst forecasts for the company.
Of course Invitae 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 aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.