Benzinga | Nov 18, 2020 11:55AM EST

Insider Buys Diffusion Pharmaceuticals Shares



Shares of Diffusion Pharmaceuticals Inc (NASDAQ:DFFN) rose by 4.1% from the previous closing price. A Form 4 filing filed with the SEC on Wednesday, November 18 showed that & Secretary Elder William Robert bought 10,000 shares at $0.67 on Monday, Nov 16, and bought 5,000 shares at $0.63 on Tuesday, Nov 17.The transaction moved the executive's stake in Diffusion Pharmaceuticals Inc. to 10,000 shares.

The Importance of Insider Transactions

Insider transactions shouldn't be used primarily to make an investing decision, however an insider transaction can be an important factor in the investing decision.

When an insider buys stock after an important sell off, that can indicate the insider's faith in the success of the organization. Henceforth, if the stock is bought at new highs, it might be because the insider feels that the stock is not 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."

Transaction Codes To Focus On

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. An open-market transaction means the insider went into the market of their own volition and made an active decision about the potential path for a company and its 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.