Don't Ignore The Insider Selling In iRhythm Technologies

Explore iRhythm Technologies's Fair Values from the Community and select yours

Anyone interested in iRhythm Technologies, Inc. (NASDAQ:IRTC) should probably be aware that the Chief Commercial Officer, Chad Patterson, recently divested US$445k worth of shares in the company, at an average price of US$164 each. The eyebrow raising move amounted to a reduction of 15% in their holding.

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The Last 12 Months Of Insider Transactions At iRhythm Technologies

Over the last year, we can see that the biggest insider sale was by the President, Quentin Blackford, for US$2.5m worth of shares, at about US$112 per share. That means that even when the share price was below the current price of US$161, an insider wanted to cash in some shares. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 18% of Quentin Blackford's holding.

In total, iRhythm Technologies insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

See our latest analysis for iRhythm Technologies

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Insider Ownership

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. iRhythm Technologies insiders own about US$60m worth of shares. That equates to 1.2% 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.

What Might The Insider Transactions At iRhythm Technologies Tell Us?

Insiders sold iRhythm Technologies shares recently, but they didn't buy any. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd practice some caution before buying! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing iRhythm Technologies. In terms of investment risks, we've identified 1 warning sign with iRhythm Technologies and understanding this should be part of your investment process.

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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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.