In the last year, multiple insiders have substantially increased their holdings of DiaMedica Therapeutics Inc. (NASDAQ:DMAC) stock, indicating that insiders’ optimism about the company’s prospects has increased.
Although we don’t think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
Over the last year, we can see that the biggest insider purchase was by insider Thomas von Koch for US$10.0m worth of shares, at about US$3.50 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$6.14. Because it occurred at a lower valuation, it doesn’t tell us much about whether insiders might find today’s price attractive.
In the last twelve months DiaMedica Therapeutics insiders were buying shares, but not selling. The average buy price was around US$3.87. We don’t deny that it is nice to see insiders buying stock in the company. But we must note that the investments were made at well below today’s share price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Check out our latest analysis for DiaMedica Therapeutics
DiaMedica Therapeutics is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.
Over the last quarter, DiaMedica Therapeutics insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought US$43m worth of shares. This could be interpreted as suggesting a positive outlook.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. DiaMedica Therapeutics insiders own about US$151m worth of shares (which is 48% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
It’s certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn’t make a profit over the last twelve months, which makes us cautious. When combined with notable insider ownership, these factors suggest DiaMedica Therapeutics insiders are well aligned, and quite possibly think the share price is too low. Nice! So while it’s helpful to know what insiders are doing in terms of buying or selling, it’s also helpful to know the risks that a particular company is facing. To that end, you should learn about the 4 warning signs we’ve spotted with DiaMedica Therapeutics (including 1 which is potentially serious).
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 of direct interests only, but not derivative transactions or indirect interests.
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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.