We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Hikma Pharmaceuticals PLC (LON:HIK).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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.’
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The Last 12 Months Of Insider Transactions At Hikma Pharmaceuticals
In the last twelve months, the biggest single sale by an insider was when Executive Vice President of Corporate Development and M&A Bassam Rushdi Kanaan sold UK£575k worth of shares at a price of UK£19.17 per share. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is UK£15.56. So it is hard to draw any strong conclusion from it. Bassam Rushdi Kanaan was the only individual insider to sell shares in the last twelve months.
The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Hikma Pharmaceuticals insiders own about UK£81m worth of shares (which is 2.2% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Hikma Pharmaceuticals Insiders?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. Our analysis of Hikma Pharmaceuticals insider transactions leaves us cautious. The modest level of insider ownership is, at least, some comfort. Of course, the future is what matters most. So if you are interested in Hikma Pharmaceuticals, you should check out this free report on analyst forecasts for the company.
But note: Hikma Pharmaceuticals may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.