When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in ESSA Pharma Inc.'s (NASDAQ:EPIX) instance, it's good news for shareholders.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for ESSA Pharma

The Last 12 Months Of Insider Transactions At ESSA Pharma

Over the last year, we can see that the biggest insider purchase was by Independent Director Franklin Berger for US$420k worth of shares, at about US$5.99 per share. That means that an insider was happy to buy shares at above the current price of US$5.55. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. 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.

While ESSA Pharma insiders bought shares during the last year, they didn't sell. The average buy price was around US$5.35. Although they bought at below the recent share price, it is good to see that insiders are willing to invest in the company. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

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.

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. Our data indicates that ESSA Pharma insiders own about US$5.5m worth of shares (which is 2.2% of the company). Whilst better than nothing, we're not overly impressed by these holdings.

What Might The Insider Transactions At ESSA Pharma Tell Us?

The fact that there have been no ESSA Pharma insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. While we have no worries about the insider transactions, we'd be more comfortable if they owned more ESSA Pharma stock. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To help with this, we've discovered 3 warning signs (1 is significant!) that you ought to be aware of before buying any shares in ESSA Pharma.

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.