Among the small-cap stocks garnering attention today is T2 Biosystems (NASDAQ:TTOO). Shares of TTOO stock are down more than 14% in afternoon trading on an announcement that a key investor is in selling mode.
According to a Form 4 filed with the U.S. Securities and Exchange Commission (SEC), CR Group — a 10% owner of T2 Biosystems — sold more than 10 million shares of TTOO stock on Sept. 19 at an average price of about 36 cents per share. For investors looking for a reason to buy this stock at current levels (substantially below where CR Group sold its stock), this doesn’t provide much in the way of confidence.
Given the fact that TTOO has actually been on the decline in recent days despite a key catalyst in the form of U.S. Food and Drug Administration (FDA) clearance for its biothreat panel, perhaps some information got leaked. Whatever the case, this is the current situation and investors now have an enigma on their hands.
Let’s dive into what to make of the recent price action with this stock.
TTOO Stock Continues to Decline on Insider Selling
This rather significant stock sale on the heels of a key catalyst is worrisome for most TTOO investors. When timed in line with certain key events and in significant size, insider selling activity can send a signal to the market (intended or not) that insiders are looking to time their exit. Accordingly, for new investors considering shares, this is certainly something that’s discouraging to see.
Given T2’s market capitalization of only $83 million and share price well below Nasdaq’s minimum listing requirement, this company likely has a few battles ahead of it moving forward. In the penny stock realm, there are plenty of options for investors to choose from. Companies like T2 with significant shareholders selling stock on good news may be pushed aside in favor of other firms with big insider buying activity.
For now, TTOO stock will remain on my watchlist. Still, this is a stock I think investors need to take caution with right now. In certain instances, insider selling activity is worrisome. This is one of those times.
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On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
