Last week, Design Therapeutics, Inc. (NASDAQ:DSGN) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 19% last week, resulting in a US$52m increase in the company's market worth, implying a 81% gain on their initial purchase. As a result, the stock they originally bought for US$153.9k is now worth US$277.9k.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Design Therapeutics Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Independent Director John Schmid for US$100k worth of shares, at about US$3.74 per share. Even though the purchase was made at a significantly lower price than the recent price (US$5.64), we still think insider buying is a positive. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
Design Therapeutics insiders may have bought shares in the last year, but they didn't sell any. Their average price was about US$3.12. To my mind it is good that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insider Ownership
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 16% of Design Therapeutics shares, worth about US$43m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Design Therapeutics Insiders?
It doesn't really mean much that no insider has traded Design Therapeutics shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Design Therapeutics and their transactions don't cause us concern. 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. At Simply Wall St, we've found that Design Therapeutics has 4 warning signs (2 are significant!) that deserve your attention before going any further with your analysis.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.
