We often see insiders buying up shares in companies that perform well over the long term. 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 before you buy or sell Editas Medicine, Inc. (NASDAQ:EDIT), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
Editas Medicine Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Director Jessica Hopfield bought US$244k worth of shares at a price of US$23.94 per share. So it's clear an insider wanted to buy, at around the current price, which is US$26.82. That means they have been optimistic about the company in the past, though they may have changed their mind. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the Editas Medicine insider decided to buy shares at close to current prices. Jessica Hopfield was the only individual insider to buy shares in the last twelve months.
You can see the insider transactions (by 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!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Editas Medicine Insiders Are Selling The Stock
Over the last three months, we've seen a bit of insider selling at Editas Medicine. Executive VP & Chief Scientific Officer Charles Albright only netted US$17k selling shares, in that period. It's not great to see insider selling, nor the lack of recent buyers. But the amount sold isn't enough for us to put any weight on it.
Insider Ownership of Editas Medicine
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. We usually like to see fairly high levels of insider ownership. Editas Medicine insiders own about US$34m worth of shares. That equates to 2.5% 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?
While there has not been any insider buying in the last three months, there has been selling. But given the selling was modest, we're not worried. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Editas Medicine and we see no evidence to suggest they are worried about the future. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Editas Medicine.
Of course Editas Medicine 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 currently account for open market transactions and private dispositions, but not derivative transactions.
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.
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