Small Cap Stocks: Why Investors Should Pay Attention to Insiders

September 30, 2019, By fierce,

No one knows their stock better than an insider.

And when they begin to buy, it’s important that investors look into why.  That’s because it may just lead to your next profitable opportunity.

For example, back in April 2019, shares of Syros Pharmaceuticals (SYRS) sank from nearly $10 to $6.50 on a secondary offering that raised $70 million.  At the time, a director bough $4 million at $7.50 apiece on April 9, 2019.  It was also the first instance of insider buying since Jan. 2018.

Not only did the insider buy on oversold conditions, but he was allegedly buying because of several new drugs in the pipeline.  For example, the company had just announced it planned to expand its Phase 2 trial to assess the safety of SY-1425 in combination with azacitidine in IRF8 biomarker-positive patients with relapsed or refractory acute myeloid leukemia.

While the stock would pull back a bit more, it would also soon rebound to a high of $12.  Thanks to that insider buying, we were aware of a potentially great trade.

We saw the same thing happen with scPharmaceuticals (SCPH).

An insider saw potential in this micro-cap stock, buying $1 million in new shares on April 11.

While the stock sees very little attention from the Street, the insider activity was enough to pique investor interest around $2.95 a share before the stock exploded to $7.85.

While insider buying won’t always produce a sure-fire winner, it’s still important to be well aware of what they’re up to – and why.

Leave a Reply

Your email address will not be published. Required fields are marked *