Long LQDA on heavy insider buying

So while US exchanges were closed and celebrated Independence Day, so we had some time to analyze the markets and find something interesting. LQDA may be one of those interesting stocks.

Before I continue, I'm obliged to disclose the fact that I do not hold LQDA stocks and only consider buying. Please note that this analysis is my point of view, and trading is a risky activity. You are the only responsible for your trading actions. Now, with disclaimers being said, let's take a look at the trade.

Ok, so what is LQDA? LQDA is a biotechnological company that does something they call "PRINT" technology. I won't argue I completely understand what it means even after I read a number of articles, so I better work with numbers. Here are some of the strong arguments in favor of buying.
  • First of all, on July 2nd the company announced the closing of its underwritten stocks at $8.00. Of course, the news tanked the stock price from $10.5 to $8 and below. A good thing is that one of the key insiders, Eshelman Ventures, bought additional stocks worth 15 million dollars. Such strong trading activity of an insider usually indicates a good background and good long-term perspectives. Moreover, Eshelman Ventures is the fund that specializes in Biotechnological companies. I didn't analyze their portfolio yet, but I read about the founder, Fred Eshelman, and I believe their purchase has a strong reasoning.
  • Besides heavy insiders buying, we see that the stock price is close to both - lower uptrend channel (please note log scale I'm using) and near the support level . The levels combination and high volume during the last days after the gap also suggest possible uptrend continuation.
  • Finally, LQDA is a final stage biotechnological companies with sales at about 8 million dollars. Given strong insider support, we may conclude that this is the stock that may combine private equity returns with lower risk (given the support of key shareholders).

So, the stock looks interesting and I consider going long if the price rebounds from the support level or trendline and closes above $8.00
Comment: P.S. Check-out our free educational platform Sharepdge Academy at sharpedge.academy. There, you can find many valuable courses, videos, articles, and researches.


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