It is not uncommon to see companies perform well in the years after insiders buy shares. 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 we’ll take a look at whether insiders have been buying or selling shares in Vapotherm, Inc. (NYSE:VAPO).
What Is Insider Buying?
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 logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
View our latest analysis for Vapotherm
Vapotherm Insider Transactions Over The Last Year
The insider Thomas Smith made the biggest insider purchase in the last 12 months. That single transaction was for US$3.0m worth of shares at a price of US$29.57 each. So it’s clear an insider wanted to buy, at around the current price, which is US$31.76. Of course they may have changed their mind. But this suggests they are optimistic. While we always like to see insider buying, it’s less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. In this case we’re pleased to report that the insider purchases were made at close to current prices.
Happily, we note that in the last year insiders paid US$4.7m for 185.00k shares. But insiders sold 2.50k shares worth US$69k. In total, Vapotherm insiders bought more than they sold over the last year. Their average price was about US$25.60. Although they bought at below the recent share price, it is good to see that insiders are willing to invest in the company. 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!
Vapotherm is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Vapotherm Have Bought Stock Recently
Over the last three months, we’ve seen significantly more insider buying, than insider selling, at Vapotherm. insider Thomas Smith spent US$4.4m on stock. But we did see insider David Blouin sell shares worth US$69k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
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. Insiders own 7.4% of Vapotherm shares, worth about US$60m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Vapotherm Insiders?
It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. However, we note that the company didn’t make a profit over the last twelve months, which makes us cautious. Given that insiders also own a fair bit of Vapotherm we think they are probably pretty confident of a bright future. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Vapotherm. Every company has risks, and we’ve spotted 3 warning signs for Vapotherm you should know about.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity 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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