Insiders Could Have Profited By Holding onto Alector Shares Despite 10% Drop

Alector, Inc.'s (NASDAQ:ALEC) stock price has dropped 10% in the previous week, but insiders who sold US$1.1m in stock over the past year have had less luck. The average selling price of US$2.60 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At Alector

Over the last year, we can see that the biggest insider sale was by the Director & Member of Scientific Advisory Board, Richard Scheller, for US$228k worth of shares, at about US$5.16 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$1.46. So it may not shed much light on insider confidence at current levels.

Alector insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

See our latest analysis for Alector

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Insiders At Alector Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Alector. In total, insiders dumped US$124k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data indicates that Alector insiders own about US$9.9m worth of shares (which is 6.5% of the company). Whilst better than nothing, we're not overly impressed by these holdings.

What Might The Insider Transactions At Alector Tell Us?

Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. Insiders own relatively few shares in the company, and when you consider the sales, we're not particularly excited about the stock. So we're not rushing to buy, to say the least. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Alector. In terms of investment risks, we've identified 2 warning signs with Alector and understanding these should be part of your investment process.

But note: Alector 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.

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.