Insider buying can provide valuable clues about a stock’s future direction. Insiders sell company stock for a number of reasons. Yet they only buy stock for one reason – they expect it to rise.
Here, we are going to flag some interesting insider buying at Surgalign Holdings Inc (SRGA:US). Surgalign is an American company that specializes in spine solutions. Committed to new product innovation, it offers a comprehensive line of spine products backed by clinical research. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $246 million.
Surgalign Holdings Inc: Insider Buying
Our records show that on 1 February, six insiders at Surgalign bought stock through a public offering. Those who purchased shares included President and CEO Terry Rich, who spent $1.2 million on stock, Chief Commercial Officer Scott Durall, who spent $500,000 on stock, and board member Dr. Paul Lewicki, PhD who spent $3 million on stock. Combined, the six insiders spent around $5.5 million on SRGA stock.
This insider activity stands out for a few reasons. Firstly, the insiders here have spent a substantial sum of money on company stock. Our data shows that some of these insiders have increased the size of their holdings significantly. This suggests that they are confident the stock is undervalued at present.
Secondly, many of these insiders have significant industry expertise. President and CEO Terry Rich, for example, previously led the turnaround of Alphatec Spine from December 2016 through December 2018. Meanwhile, Dr. Paul Lewicki, PhD co-founded Holo Surgical Inc. This experience means they are likely to have a good read on the company’s prospects.
In an effort to drive growth, Surgalign has made a number of moves recently to position itself as a stand-alone global spine company. In July, it completed the sale of its OEM business. Then, in October, it completed the acquisition of Holo Surgical. Holo Surgical is a Chicago-based private technology company developing the revolutionary Augmented Reality and Artificial Intelligence platform, ARAI, to enable digital spine surgery. This acquisition is the first step in accelerating the company’s transformation into a leading digital surgical company in spine and management appears to be confident about the company’s prospects after the deal.
“The completion of the Holo Surgical acquisition brings an innovative surgical platform and world-class team into our organization, enabling us to advance the standard of care by reimagining what is possible through integrated intelligent technology,” said Terry Rich at the time of the acquisition.
More recently, the company advised that it plans to leverage the strong momentum it has generated to further improve the business into the future through its strategy of build, innovate, and acquire.
In light of this acquisition activity, we see the insider buying here as a bullish signal.