It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Alphatec Holdings, Inc. (NASDAQ:ATEC).
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.
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. 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’.
The Last 12 Months Of Insider Transactions At Alphatec Holdings
The Executive Chairman Patrick Miles made the biggest insider purchase in the last 12 months. That single transaction was for US$232k worth of shares at a price of US$3.00 each. We do like to see buying, but this purchase was made at well below the current price of US$10.16. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn’t tell us much about what they think of current prices.
Happily, we note that in the last year insiders paid US$484k for 133.50k shares. But they sold 25.00k shares for US$173k. In the last twelve months there was more buying than selling by Alphatec Holdings insiders. The average buy price was around US$3.62. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today’s share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Alphatec Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Alphatec Holdings Insiders Are Selling The Stock
Over the last three months, we’ve seen a bit of insider selling at Alphatec Holdings. Executive VP & CFO Jeffrey Black divested only US$32k worth of shares in that time. 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.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. Alphatec Holdings insiders own about US$87m worth of shares. That equates to 11% of the company. 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 Do The Alphatec Holdings Insider Transactions Indicate?
Our data shows a little more insider selling, but no insider buying, in the last three months. However, the sales are not big enough to concern us at all. But insiders have shown more of an appetite for the stock, over the last year. Overall we don’t see anything to make us think Alphatec Holdings insiders are doubting the company, and they do own shares. 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. You’d be interested to know, that we found 4 warning signs for Alphatec Holdings and we suggest you have a look.
But note: Alphatec Holdings 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.