Investors who take an interest in Terns Pharmaceuticals, Inc. (NASDAQ:TERN) should definitely note that the CEO & Director, Amy Burroughs, recently paid US$7.15 per share to buy US$110k worth of the stock. We reckon that's a good sign, especially since the purchase boosted their holding by 423%.
Terns Pharmaceuticals Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Director Hongbo Lu bought US$5.0m worth of shares at a price of US$10.50 per share. That means that an insider was happy to buy shares at above the current price of US$6.92. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing 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.
Over the last year, we can see that insiders have bought 501.22k shares worth US$5.2m. But they sold 6.14k shares for US$47k. In total, Terns Pharmaceuticals insiders bought more than they sold over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Based on our data, Terns Pharmaceuticals insiders have about 0.6% of the stock, worth approximately US$3.6m. We consider this fairly low insider ownership.
What Might The Insider Transactions At Terns Pharmaceuticals Tell Us?
It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Terns Pharmaceuticals insiders are reasonably well aligned, and optimistic for the future. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example, Terns Pharmaceuticals has 4 warning signs (and 2 which are a bit unpleasant) we think you should know about.
Of course Terns Pharmaceuticals 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 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.