Should You Take Comfort From Insider Transactions At Insmed Incorporated (NASDAQ:INSM)?

It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Insmed Incorporated (NASDAQ:INSM).

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the 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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

View our latest analysis for Insmed

The Last 12 Months Of Insider Transactions At Insmed

The President, William Lewis, made the biggest insider sale in the last 12 months. That single transaction was for US$416k worth of shares at a price of US$3.40 each. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$16.32. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don’t know for sure what they think of the stock price. This single sale was 100% of William Lewis’s stake. William Lewis was the only individual insider to sell over the last year.

Over the last year, we can see that insiders have bought 54785 shares worth US$872k. But they sold 122k for US$416k. In the last twelve months there was more buying than selling by Insmed insiders. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

NasdaqGS:INSM Recent Insider Trading, August 27th 2019
NasdaqGS:INSM Recent Insider Trading, August 27th 2019

Insmed Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Insmed shares. In total, President William Lewis sold US$416k worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the insiders think that the shares are a bargain.

Does Insmed Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insmed insiders own about US$12m worth of shares. That equates to 0.9% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Insmed Insiders?

An insider hasn’t bought Insmed stock in the last three months, but there was some selling. In contrast, they appear keener if you look at the last twelve months. We like that insiders own a fair amount of the company. So we’re not overly bothered by recent selling. Of course, the future is what matters most. So if you are interested in Insmed, you should check out this free report on analyst forecasts for the company.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.