Edesa Biotech, Inc. (NASDAQ:EDSA) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 44% resulting in a US$44m addition to the company’s market value. Put another way, the original US$304.3k acquisition is now worth US$1.97m.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Edesa Biotech Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Stephen Lemieux, for US$140k worth of shares, at about US$6.34 per share. That means that even when the share price was below the current price of US$16.11, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 100% of Stephen Lemieux's holding. Stephen Lemieux was the only individual insider to sell shares in the last twelve months.

In the last twelve months insiders purchased 122.57k shares for US$304k. But they sold 22.49k shares for US$140k. In the last twelve months there was more buying than selling by Edesa Biotech insiders. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

Edesa Biotech is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Insiders At Edesa Biotech Have Bought Stock Recently

There has been significantly more insider buying, than selling, at Edesa Biotech, over the last three months. In total, two insiders bought US$304k worth of shares in that time. On the other hand, insider Stephen Lemieux netted US$140k by selling. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Does Edesa Biotech Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Edesa Biotech insiders own 8.0% of the company, worth about US$12m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Edesa Biotech Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Given that insiders also own a fair bit of Edesa Biotech we think they are probably pretty confident of 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.

But note: Edesa Biotech may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.

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.