Biotech Values

[DewDiligence]

Re: A small insider purchase:

When it comes to small insider purchases, it makes a difference exactly who is doing the purchasing.

OXGN’s CEO and CSO just bought $14-15K each of stock in the open market. (That’s not a typo.) While most posters on the OXGN Yahoo board are going gaga over these purchases, I am wondering why top executives who really believed in their company’s prospects would buy such minuscule amounts. Given that the executives knew the transactions would be reported on SEC Form-4 filings, it’s not unreasonable to view the transactions as mostly cosmetic.

In GENR’s case, independent director Frank Ecock bought approximately $35,000 on the open market earlier this week. I contend that such a small purchase by an independent (i.e. non-executive) director is quite different in nature from a small purchase by the CEO or another executive officer.

In the first place, independent directors often serve on several companies’ boards, and hence it is common for them to engage in smallish transactions in each of several companies. More important, transactions by independent directors do not generally bar a company from reporting material news in the near-to-medium term (as trading by executive officers does) because independent directors are not expected to be pricy to detailed company developments on a day-to-day basis.