We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Puma Biotechnology, Inc. (NASDAQ:PBYI).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
The Last 12 Months Of Insider Transactions At Puma Biotechnology
Over the last year, we can see that the biggest insider sale was by the Founder, Alan Auerbach, for US$50k worth of shares, at about US$8.39 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$11.71. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can’t be sure if it does mean insiders think the shares are fully valued, so it’s only a weak sign. We note that the biggest single sale was only 0.1% of Alan Auerbach’s holding.
In the last year Puma Biotechnology insiders didn’t buy any company stock. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Puma Biotechnology better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Puma Biotechnology Insiders Are Selling The Stock
Over the last three months, we’ve seen a bit of insider selling at Puma Biotechnology. Insiders only netted US$12k selling shares, in that period. It’s not great to see insider selling, nor the lack of recent buyers. But the amount sold isn’t enough for us to put any weight on it.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. It appears that Puma Biotechnology insiders own 13% of the company, worth about US$60m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Puma Biotechnology Insiders?
Our data shows a little more insider selling, but no insider buying, in the last three months. However, the sales are not big enough to concern us at all. We’re a little cautious about the insider selling at Puma Biotechnology. But it’s good to see that insiders own shares in the company. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Puma Biotechnology. To assist with this, we’ve discovered 1 warning sign that you should run your eye over to get a better picture of Puma Biotechnology.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.