Insiders Just Bought $62.1 Million Worth Of Tesaro Inc (TSRO) Shares. Time To Buy?

A number of TESARO Inc (Nasdaq: TSRO) insiders has bought 1.1 million shares since Friday. While the stock has lost more than half its value in six months, it’s worth taking a closer look at the company.

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

Check out our H2 hedge fund letters here.

Insider Buying: Tesaro

Insiders have been buying shares of Tesaro according to recent form 4 filings with the SEC. The notable insiders include Leon Moulder (Co-founder and CEO) as well as a number of general partners of New Enterprise Associates (10% owner), as shown in the table below. Total insider buying has totaled $62.1 million since last Friday which is approximately 1.8% of Tesaro's total market capitalization.

Recent TESARO, Inc. Insider Transactions
Insider Trading Relationship Date #Shares Value ($)
BARRETT M JAMES 10% Owner Mar 2-6 116,445 $6,684,477
BARRIS PETER J 10% Owner Mar 2-6 145,532 $8,354,185
BASKETT FOREST 10% Owner Mar 2-6 145,532 $8,354,185
KERINS PATRICK J 10% Owner Mar 2-6 116,445 $6,684,477
MOTT DAVID M Director Mar 2-6 145,532 $8,354,185
MOULDER LEON Co-Founder and CEO Mar 02 5,000 $284,640
NEW ENTERPRISE ASSOCIATES 13 L 10% Owner Mar 2-6 116,445 $6,684,477
SANDELL SCOTT D 10% Owner Mar 2-6 145,532 $8,354,185
Viswanathan Ravi 10% Owner Mar 2-6 145,532 $8,354,185
TOTAL 1,081,995 $62,108,996

Peter Barris, who is the Managing General Partner at New Enterprise Associates, most recently bought $8.4 million worth of shares on March 6th. This is what propelled me to take a closer look at the company's insider activity.

Potential Reasons For Insider Activity

Tesaro is an oncology-focused biopharmaceutical company that identifies, acquires, develops, and commercializes cancer therapeutics and oncology supportive care products in the United States.

The company's shares last traded at $62.18 as of Wednesday, down -64.9% over the last year and 26.8% in the last three months. While the stock has lost significant value, the recent insider transactions could signal a bottom has been reached.

Tesaro Inc (TSRO)


In addition,'s average fair value estimate of $74.47 implies 19.8% upside and is calculated from 4 valuation models as shown in the table below. Each analysis uses consensus Wall Street estimates for the projections when available.

Tesaro Valuation Detail
Analysis Model Fair Value Upside (Downside)
Peer Revenue Multiples $40.84 -34.3%
5-yr DCF EBITDA Exit $94.58 52.1%
10-yr DCF Growth Exit $100.08 60.9%
5-yr DCF Growth Exit $62.39 0.3%
Average $74.47 19.8%
Median $78.48 26.2%

How Should You Interpret this?

While executives and insiders are always happy to tell you all the reasons why their stock is a buy, their actions can tell a different story about the company’s future prospects. A trend of buying activity may indicate that insiders think the stock is going up over the upcoming time period, and are trying to buy before the price rises.

Keep in mind that insider activity is only one aspect of stock research and that there are other important items to consider. I recommend you continue to research Tesaro to get a more comprehensive view of the company's fundamentals by looking at:

Valuation: how much upside do shares of Tesaro have based on Wall Street's consensus price target? Take a look at our analyst upside data explorer that compares the company's upside relative to its peers.

Risk Metric: what is Tesaro's cash ratio which is used to assess a company's short-term liquidity. View the company's cash ratio here.

Risk Metric: what is Tesaro's Altman Z score? It's a famous formula used to predict the probability that a firm will go into bankruptcy within two years. View the company's Altman Z score here.

Article by Brian Dentino,