Yahoo Finance With Scilex Holding Up 36%, Insider Buyers Count Their Returns
Insiders who bought Scilex Holding Company (NASDAQ:SCLX) stock in the last 12 months were richly rewarded last week. The company's market value increased by US$35m as a result of the stock's 36% gain over the same period. Put another way, the original US$186.0k acquisition is now worth US$234.9k.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Scilex Holding
The Last 12 Months Of Insider Transactions At Scilex Holding
Notably, that recent purchase by Jaisim Shah is the biggest insider purchase of Scilex Holding shares that we've seen in the last year. Even though the purchase was made at a significantly lower price than the recent price (US$1.11), we still think insider buying is a positive. 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.
Scilex Holding insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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.
Scilex Holding Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at Scilex Holding. Not only was there no selling that we can see, but they collectively bought US$186k worth of shares. This is a positive in our book as it implies some confidence.
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data isn't picking up on much insider ownership at Scilex Holding, though insiders do hold about US$991k worth of shares. But they may have an indirect interest through a corporate structure that we haven't picked up on. This level of insider ownership is notably low, and not very encouraging.
What Might The Insider Transactions At Scilex Holding Tell Us?
It is good to see recent purchasing. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Scilex Holding stock. While we like knowing 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. Every company has risks, and we've spotted 3 warning signs for Scilex Holding (of which 2 can't be ignored!) you should know about.
Of course Scilex Holding may not be the best stock to buy. So you may wish to see this free collection of high quality 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
