We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Cidara Therapeutics, Inc. (NASDAQ:CDTX).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. 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'.
Cidara Therapeutics Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Chief Financial Officer James Levine bought US$101k worth of shares at a price of US$2.01 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$2.00). 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. In our view, the price an insider pays for shares is very important. 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$201k for 100.00k shares. But insiders sold 9.80k shares worth US$22k. Overall, Cidara Therapeutics insiders were net buyers during the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Cidara Therapeutics Insiders Are Selling The Stock
We have seen a bit of insider selling at Cidara Therapeutics, over the last three months. Insiders divested only US$22k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the volume sold is so low that it really doesn't bother us.
Many investors like to check how much of a company is owned by 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. Insiders own 8.8% of Cidara Therapeutics shares, worth about US$8.5m, according to our data. However, it's possible that insiders might have an indirect interest through a more complex structure. Whilst better than nothing, we're not overly impressed by these holdings.
So What Do The Cidara Therapeutics Insider Transactions Indicate?
We did not see any insider buying in the last three months, but we did see selling. But given the selling was modest, we're not worried. But insiders have shown more of an appetite for the stock, over the last year. The transactions are fine but it'd be more encouraging if Cidara Therapeutics insiders bought more shares in the company. 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. At Simply Wall St, we found 4 warning signs for Cidara Therapeutics that deserve your attention before buying any shares.
But note: Cidara Therapeutics 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. 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.
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