Insiders may be rethinking their US$747k Fathom Holdings Inc. (NASDAQ:FTHM) investment now that the company has lost US$15m in value

Insiders who bought US$747k worth of Fathom Holdings Inc.'s (NASDAQ:FTHM) stock at an average buy price of US$6.32 over the last year may be disappointed by the recent 19% decrease in the stock. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$428k.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Fathom Holdings

The Last 12 Months Of Insider Transactions At Fathom Holdings

The President Marco Fregenal made the biggest insider purchase in the last 12 months. That single transaction was for US$284k worth of shares at a price of US$10.17 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$3.62). 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. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While Fathom Holdings insiders bought shares during the last year, they didn't sell. Their average price was about US$6.32. I'd consider this a positive as it suggests insiders see value at around the current price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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

Fathom Holdings Insiders Bought Stock Recently

Over the last quarter, Fathom Holdings insiders have spent a meaningful amount on shares. We can see that Independent Director Scott Flanders paid US$76k for shares in the company. No-one sold. That shows some optimism about the company's future.

Insider Ownership Of Fathom Holdings

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. Fathom Holdings insiders own 51% of the company, currently worth about US$32m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Fathom Holdings Insiders?

It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Fathom Holdings. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 4 warning signs for Fathom Holdings (1 is a bit unpleasant!) and we strongly recommend you look at them before investing.

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, but not derivative transactions.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.