It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Sierra Oncology, Inc. (NASDAQ:SRRA), you may well want to know whether insiders have been buying or selling.

Do Insider Transactions Matter?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company's stock when the firm is about to reveal new agreements with customers and suppliers'.

View our latest analysis for Sierra Oncology

The Last 12 Months Of Insider Transactions At Sierra Oncology

Over the last year, we can see that the biggest insider purchase was by Chief Development Officer Barbara Klencke for US$113k worth of shares, at about US$12.25 per share. We do like to see buying, but this purchase was made at well below the current price of US$19.14. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

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 growing companies that insiders are buying.

Insider Ownership of Sierra Oncology

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 information indicates that Sierra Oncology insiders own about US$319k worth of shares. It's always possible we are missing something but from our data, it looks like insider ownership is minimal.

So What Does This Data Suggest About Sierra Oncology Insiders?

The fact that there have been no Sierra Oncology insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. The transactions are fine but it'd be more encouraging if Sierra Oncology insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Sierra Oncology. To that end, you should learn about the 4 warning signs we've spotted with Sierra Oncology (including 1 which is potentially serious).