We recently published a list of 10 Small–Cap Stocks Insiders Are Selling Recently. In this article, we are going to take a look at where Travere Therapeutics, Inc. (NASDAQ:TVTX) stands against other small–cap stocks insiders are selling recently.
Why are some investors focusing on stocks with smaller market capitalizations? Among some of the reasons are diversification of their portfolios, because small-cap stocks usually operate in different industries than large-cap companies. Another reason is the share price, which is often lower than that of companies with larger market capitalization (above $10 billion), making them more affordable.
Some investors’ strategy is finding nascent companies with strong growth potential, which can bring high returns once the companies have grown. Even though small-cap stocks often carry higher risks and are more prone to market volatility, they also offer investors more room for growth.
What are some ways to assess small-cap stocks that are worth investing in? While there’s no single simple or complicated rule that investors can follow to achieve secure results, some strategies can help. One strategy is to keep track of insider trading activity. Insiders or, in other words, people in high positions within companies, such as CEOs, CFOs, directors and other executives have valuable insights into the company’s strategic moves, plans, and initiatives. A CEO’s investment in a company’s stock can sometimes signal strong confidence in the company’s future.
Does this mean that it is a bad sign for the company when insiders sell their shares? Not necessarily; just like insider buying activity doesn’t always mean stock is heading for growth. When insiders are selling their shares, it can sometimes mean that the management is losing confidence. On the other hand, it also happens that large shareholders just want to trim their holdings to more appropriate position sizes based on the risk/reward. Insiders can also decide to sell their shares due to personal financial reasons that have nothing to do with the company.
While both insider selling and buying can be driven by various motives, it’s important to consider these moves within the broader context of the company’s fundamentals, industry trends, and overall market conditions.
To identify the 10 large-cap stocks insiders are selling recently, we considered only stocks with a market capitalization of between $250 million to $2 billion. We first used Insider Monkey’s insider trading stock screener and looked for stocks with at least two insiders selling over the last two months.
With each stock we note the number of recent insider sales and the company’s current market capitalization. But why is it important to follow insider activity? Our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds, focusing on insider trading and stock picks from hedge fund investor newsletters and conferences. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A laboratory technician working on a solution of rare diseases, housed in a cholic acid capsule.
Travere Therapeutics, Inc. (NASDAQ:TVTX)
Number of insiders selling: 8
Market capitalization: $1.899B
Travere Therapeutics, Inc. (NASDAQ:TVTX) is a biopharmaceutical company developing therapeutics for rare diseases among 10 small-cap stocks that insiders have been selling recently. Its main focus is treatments for rare kidney and metabolic diseases. The company’s lead drug candidate, sparsentan, has obtained U.S. Food and Drug Administration (FDA) approval for slowing kidney function decline.
Earlier this month, Travere Therapeutics (NASDAQ:TVTX) announced it has completed its Type C meeting with the FDA and plans to submit a supplemental New Drug Application (sNDA) seeking traditional approval of filspari for focal segmental glomerulosclerosis (FSGS). The sNDA will be based on existing data from the Phase 3 DUPLEX and Phase 2 DUET studies of filspari and is expected to be submitted around the end of the first quarter of 2025.
For the third quarter of 2024, Travere Therapeutics (NASDAQ:TVTX) reported net product sales of $61 million, compared to $33.9 million for the same period in 2023. The increase is attributable to sales from the ongoing commercial launch of filspari.
In January and the beginning of February, eight insiders, among which are CEO, CFO, and CMO sold around $2.97 million worth of Travere Therapeutics shares at an average price of $19.61 per share. The stock is currently trading at $23.72 per share, having gained 36.17% since the beginning of the year.
According to data from MarketBeat, 14 Wall Street analysts have a consensus rating of “Moderate Buy” on Travere Therapeutics stock. The average price target is $27.77, indicating a forecasted upside of 17.07% from the current price.
On the other hand, eight analysts have an average “Buy” rating on Clearwater stock and the 12-month price target is $31.75. Clearwater shares are currently trading at $27.51 per share.
Overall, TVTX ranks 3rd on our list of small–cap stocks insiders are selling recently. While we acknowledge the potential of TVTX, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TVTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.