Insider buying can provide investors with valuable clues about a stock’s potential. Company insiders are often armed with the most up-to-date information on their companies’ prospects. If they’re buying stock, it’s often a positive development that investors should take note of.
Here, we are going to highlight some insider buying at Shield Therapeutics PLC (STX:LN). Shield Therapeutics is a British specialty pharmaceutical company that engages in the development and commercialization of late-stage pharmaceuticals to treat unmet medical needs. It’s listed on London’s AIM market and currently has a market capitalization of £71 million.
Shield Therapeutics PLC: Insider Buying
Regulatory filings show that on 19 January the CEO of Shield Therapeutics, Timothy Watts, purchased 100,000 STX shares at a price of £0.60 per share. This purchase cost the insider £60,000. Then, on 20 January the Chairman of Shield Therapeutics, Hans Hassler, built a new holding, purchasing 100,000 STX shares at a price of £0.59 per share, at a cost of £59,000.
This insider activity is significant for a couple of reasons. Two key insiders buying at the same time tells us that there is a consensus of opinion that the stock is undervalued at present. This pattern is a stronger insider signal than one insider buying on their own.
Secondly, it’s worth noting that Hassler has been on the board of Shield Therapeutics since July 2018. It is therefore very interesting that he has chosen to build a position now.
After a difficult period which has seen STX shares tumble over the last 12 months, a recent January trading update was reassuring. Trading for the year was in line with expectations, with revenues for 2020 expected to come in at £9.4 million.
The company also advised that it is close to launching its anaemia treatment Accrufer in the US and is making progress on getting its iron deficiency treatment Feraccru approved in China. A product launch is expected in 2023 and on approval Shield Therapeutics will receive an $11.4 million milestone payment.
“2020 has been a positive year for Shield on many fronts. European sales volume growth of around 70% despite the COVID pandemic is very encouraging for the long term,” commented CEO Timothy Watts.
On the back of this update, we see the insider buying here as a bullish signal. It suggests that key company insiders believe the shares are undervalued at present.