Insider Confidence and Market Potential: Analyzing DiaMedica Therapeutics' Recent Share Purchases as a Signal for Investors

DiaMedica Therapeutics (NASDAQ: DMAC) has witnessed a surge in insider buying activity in late August 2025, with its largest shareholder, Jan Stahlberg, acquiring 7,764,465 shares—representing 15.02% of the company’s outstanding shares—through multiple transactions between August 13 and August 27 [6]. This aggressive accumulation, coupled with academic research underscoring the predictive power of insider purchases, raises compelling questions about the stock’s near-term trajectory.

Insider Buying as a Predictive Indicator

Academic studies consistently demonstrate that insider buying correlates with future stock outperformance. A 1975–1996 analysis found that abnormal returns from insider purchases often materialize within the first five days to a month post-trade [2]. More recent research adds nuance: insiders tend to buy more shares when they possess superior information about firm fundamentals, and such transactions are linked to improved post-event operating performance and reduced undervaluation [3]. For undervalued stocks, the predictive power of insider buying is particularly strong, with long-term outperformance of 6% to 10.2% annually [4].

DiaMedica’s insider activity aligns with these patterns. Jan Stahlberg, a director and 10%+ owner, spent $11.36 million acquiring shares at prices ranging from $5.8573 to $6.00 per share [6]. His purchases, combined with Thomas Von Koch’s $9.9 million investment and Richard Jacinto’s $1.4 million stake, reflect a collective $22.8 million in insider buying over three months [4]. Notably, no insider sales have been recorded in the past six months, signaling a unified vote of confidence [5].

Financial Context and Strategic Rationale

DiaMedica’s Q2 2025 10-Q filing reveals a mixed financial picture. As of June 30, 2025, the company held $30.0 million in cash, cash equivalents, and short-term investments, down from $44.1 million in December 2024 [1]. However, a July 2025 private placement raised $30.1 million, extending the cash runway to fund operations through mid-2027 [1]. Despite this, the company reported a net loss of $15.4 million for the first half of 2025, driven by rising R&D and G&A expenses tied to its ReMEDy2 clinical trial expansion [1].

The insider purchases occur amid critical clinical milestones. Positive interim data from the Phase 2 Part 1a trial of DM199 in preeclampsia showed statistically significant reductions in blood pressure and pulsatility index, with no placental transfer observed [1]. These results, coupled with the appointment of Julie Krop, MD, as Chief Medical Officer in August 2025, underscore the company’s progress toward commercialization [1].

Institutional Investor Activity and Market Sentiment

While insiders are bullish, institutional investors have shown divergent views. BlackRock, Inc. increased its stake by 1020.7% in Q2 2025, adding 1,085,463 shares worth $4.23 million [1]. Conversely, firms like Susquehanna International Group and Millennium Management LLC reduced their holdings significantly [1]. This contrast highlights the stock’s polarizing valuation but also reinforces the signal from insiders, who often act on non-public information [3].

Risk Considerations and Long-Term Outlook

Investors must weigh DiaMedica’s ongoing net losses against its insider-driven optimism. The company’s cash burn rate of $14.7 million for H1 2025—up from $11.2 million in H1 2024—raises questions about its ability to fund operations beyond 2027 without additional capital raises [1]. However, insider buying has historically served as a contrarian indicator, with studies showing it corrects market mispricing by incorporating long-term fundamentals into stock prices [4].

For now, the alignment of insider sentiment with clinical progress and capital-raising success suggests a high-conviction trade. If the ReMEDy2 trial delivers further positive data, the stock could see a re-rating. Conversely, delays or negative results could undermine the current optimism.

Conclusion

DiaMedica Therapeutics’ insider buying activity, particularly by Jan Stahlberg, represents a strong signal of confidence in the company’s strategic and clinical trajectory. Backed by academic evidence linking insider purchases to future outperformance, these transactions warrant close attention from investors. While financial risks persist, the combination of insider sentiment, institutional activity, and clinical progress creates a compelling case for cautious optimism.

Source:
[1] DiaMedica Therapeutics Reports Second Quarter 2025 Financial Results and Provides Business Highlights [https://www.diamedica.com/investors/press-releases/detail/1711/diamedica-therapeutics-reports-second-quarter-2025]
[2] Insider Trading Academic Research [https://www.insidearbitrage.com/academic-research-related-to-insider-trading/]
[3] What do insiders know? Evidence from insider trading [https://www.sciencedirect.com/science/article/abs/pii/S0929119918308824]
[4] Insider Trading Increases Market Efficiency [https://alphaarchitect.com/insider-trading-increases-market-efficiency/]
[5] Here's a breakdown of recent trading of $DMAC stock by insiders over the last 6 months [https://www.quiverquant.com/news/DiaMedica+Therapeutics+Stock+%28DMAC%29+Opinions+on+Insider+Buying+and+Conference+Presentations]
[6] [Form 4] DiaMedica Therapeutics Inc. Insider Trading Activity [https://www.stocktitan.net/sec-filings/DMAC/form-4-dia-medica-therapeutics-inc-insider-trading-activity-b4a4ed7c68a8.html]