Both small-scale investors and larger investors employ various trading strategies and follow different investment philosophies, so they tend to look at a wide array of aspects when deciding on whether to buy, keep or sell a certain company’s shares. Insider trading behavior is one such important aspect that investors need to monitor, as shifts in insider sentiment usually serve as accurate indicators of future stock performance. Corporate insiders are well-known for following the pattern of “buying low and selling high,” a contrarian approach to investing that enables them to beat stock market gauges in aggregate.
As this insider trading article will mostly discuss fresh insider sales reported with the SEC on Tuesday, investors need to be aware that insider selling may be misinterpreted quite often. As a general rule, sales transactions are considered to be less informative than purchases, mainly because there is a wide range of potrential reasons for why corporate insiders could be selling their shares, most of which have nothing to do with the future prospects of their companies. However, if I were investing my cash into a company’s stock, I would definitely be troubled by heavy insider selling at the company, regardless of the reasons. Hence, abundant insider selling can cause some investors to run for the exits and the stock to suffer as a result. That said, this article will discuss a set of insider transactions, mostly insider sales, reported with the SEC on Tuesday.
At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details).
Luis Louro / shutterstock.com
Several Executives at Transplant Diagnostics Company Purchase Shares in Public Offering
Three executives at CareDx Inc. (NASDAQ:CDNA) filed Tuesday to disclose the purchase of shares. To begin with, Chief Executive Officer and President Peter Maag, snatched up 10,000 shares last Monday at a price tag of $4.00 per share, boosting his overall holding to 87,250 shares. Chief Commercial Officer Todd Whitson purchased a new stake of 10,000 shares on the same day for $4.00 each. Last but not least, Chief Operating Officer Mitch J. Nelles also bought 10,000 shares last Monday at the same $4.00 price tag per share. Following the recent purchase, Dr. Nelles currently owns 63,277 shares.
The three top-tier executives purchased shares through an underwritten public offering of 2.25 million shares that generated net proceeds of $7.8 million for the company. The international transplant diagnostics company plans to use the net proceeds from the freshly-completed offering to fund the development of its first commercialized testing solution, the AlloMap heart transplant molecular test, as well as fund working capital and general corporate needs. In mid-April, CareDx Inc. (NASDAQ:CDNA) acquired 98.3% of the outstanding common stock of Allenex, a Swedish transplant diagnostic company that develops, manufactures and sells products that help match donor organs with potential recipients prior to transplantation. CareDx has seen the value of its stock plunge by 44% since the start of the year. Small-cap specialist Royce & Associates, founded by Chuck Royce, reported ownership of 134,745 shares of CareDx Inc. (NASDAQ:CDNA) in its 13F for the June quarter.
Follow Caredx Inc. (NASDAQ:CDNA)
Follow Caredx Inc. (NASDAQ:CDNA)
The next two pages of this article will discuss the notable insider sales reported with the SEC on Tuesday.
