Some of the losses seen by insiders who purchased US$1.4m worth of Editas Medicine, Inc. (NASDAQ:EDIT) shares over the past year were recovered after the stock increased by 6.8% over the past week. The purchase, however, has proven to be a pricey bet, with losses currently totalling US$250k.
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.
The Last 12 Months Of Insider Transactions At Editas Medicine
The Chairman James Mullen made the biggest insider purchase in the last 12 months. That single transaction was for US$1.2m worth of shares at a price of US$46.27 each. That means that even when the share price was higher than US$38.02 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Happily, we note that in the last year insiders paid US$1.4m for 30.80k shares. On the other hand they divested 3.06k shares, for US$214k. In the last twelve months there was more buying than selling by Editas Medicine insiders. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Editas Medicine is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Editas Medicine 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Editas Medicine insiders own about US$37m worth of shares. That equates to 1.4% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Editas Medicine Tell Us?
There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Insiders own shares in Editas Medicine and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Editas Medicine. At Simply Wall St, we found 3 warning signs for Editas Medicine that deserve your attention before buying any shares.
But note: Editas Medicine 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.
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.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.