The recent price decline of 16% in Fractyl Health, Inc.'s (NASDAQ:GUTS) stock may have disappointed insiders who bought US$147.4k worth of shares at an average price of US$0.81 in the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth US$119.9k, which is not great.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
Fractyl Health Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by insider William Bradley for US$50k worth of shares, at about US$0.73 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$0.66). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. 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.
In the last twelve months Fractyl Health insiders were buying shares, but not selling. Their average price was about US$0.81. These transactions suggest that insiders have considered the current price attractive. 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!
Check out our latest analysis for Fractyl Health
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.
Fractyl Health Insiders Bought Stock Recently
Over the last quarter, Fractyl Health insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought US$127k worth of shares. This makes one think the business has some good points.
Does Fractyl Health Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Based on our data, Fractyl Health insiders have about 1.3% of the stock, worth approximately US$1.5m. I generally like to see higher levels of ownership.
So What Do The Fractyl Health Insider Transactions Indicate?
The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Fractyl Health insiders are expecting a bright 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, Fractyl Health has 6 warning signs (and 4 which are potentially serious) we think you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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 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.