Domain Partners, Orexigen Therapeutic's founding VC, has upped its stake in Orexigen (NASDAQ:OREX) through a series of recent share purchases on the open market, according to a series of Forms 4 filed with the SEC on November 24. The purchases total just over 400,000 shares at $6.93 per share for a market value of nearly $2.8 million dollars, or about 0.7% of OREX's market cap of $400 million.
OREX's Chairman, Eckard Weber, M.D., is a partner in Domain Partners, and Brian Dovey, another Domain partner, also sits on OREX's board. Domain may well have good reason to believe that the $6.50-$7 per share range around which the stock has traded for the last month is a good buy-in point.
Like many others, I regard insider buys as stronger indicators (bullish ones) than insider sells are (bearish ones). This is because insiders often have a high proportion of their net worth tied up in a company, and even if they don't, may still have all kinds of reasons to sell (a divorce, an aging parent's care or plain old diversification). By contrast, there is usually only one reason to buy.
On past occasions, some investors have found Domain's Form 4 filings a little confusing, but they don't have to be.
Because Domain owns over 10% of OREX directly, it is required to file a Form 4 each time a Domain entity makes a purchase (or, theoretically, a sale, as long as ownership is still over the 10% threshold). These are the most important forms to look at. At the same time, Domain also files a Form 4 on behalf of each of six of its partners as an indirect owner, with respect to the same transaction. This is all as required.
So all you need to do, even if you're being very thorough, is look at the Domain Partners entities Forms 4, confirm that they have a "D" for "Direct" in the right-hand column (Column 6, "Ownership Form"), add up the number of shares purchased, and then skim the Forms 4 for all the partners, confirming that they refer to the same transactions and have an "I" for "Indirect" in Column 6 on the right.
Disclosure: Long OREX