Benzinga | Sep 23, 2020 11:13AM EDT

Insider Buys Protara Therapeutics Shares

Protara Therapeutics Inc (NASDAQ:TARA) was trading 3.7% higher from the previous closing price. Davis Blaine filed a Form 4 with the SEC on Tuesday, September 22. The insider bought 1,481 shares at an average price of $16.91. After the transaction, the executive's stake in Protara Therapeutics Inc. moved to 1,481 shares.

Why Insider Transactions Are Important?

While transactions from an insider shouldn't be used as the sole item to make an investment or trading decision, an insider buying or selling stock in their company can be a good added factor that leads to more conviction in a decision.

Insiders buying stock after a notable sell off can indicate an insider's long-term belief in the success of the company; insiders buying stock at new highs can be an indication the exec doesn't feel the stock is overvalued. Insiders who sell stock at new lows could be anticipating some capitulation moment. If the insider sells at new highs, it could point to the intention to "take some profit" and "lock in a gain."

Important Transaction Codes

Investors prefer focusing on transactions which take place in the open market, indicated in the Form 4 with codes P for purchase and S for sale. If the transaction was an open-market transaction, that means that the insider made a concious decision for the company's stock moving forward.

Transaction codes besides P or S aren't relatively important as they are seldom tied to a decision by the executive. For example, transaction code A is indicative of an insider being forced to sell shares to attain compensation. Moreover, transaction code C indicates the conversion of an option.