Stock Analysis

Allakos Inc. (NASDAQ:ALLK) Insiders Have Been Selling

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NasdaqGS:ALLK
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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Allakos Inc. (NASDAQ:ALLK).

What Is Insider Selling?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.

Insider transactions are not the most important thing when it comes to long-term investing. 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'.

Check out our latest analysis for Allakos

Allakos Insider Transactions Over The Last Year

The insider, Robert More, made the biggest insider sale in the last 12 months. That single transaction was for US$826k worth of shares at a price of US$72.74 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$130. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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. We note that the biggest single sale was 100% of Robert More's holding.

Allakos insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and 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!

insider-trading-volume
NasdaqGS:ALLK Insider Trading Volume January 28th 2021

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

Does Allakos Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It appears that Allakos insiders own 1.2% of the company, worth about US$81m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Allakos Insiders?

The fact that there have been no Allakos insider transactions recently certainly doesn't bother us. Still, the insider transactions at Allakos in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we've found that Allakos has 3 warning signs (1 can't be ignored!) that deserve your attention before going any further with your analysis.

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.

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What are the risks and opportunities for Allakos?

Allakos Inc., a clinical stage biopharmaceutical company, develops therapeutics that target immunomodulatory receptors present on immune effector cells in allergy, inflammatory, and proliferative diseases.

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Risks

  • Makes less than USD$1m in revenue ($0)

  • Shareholders have been substantially diluted in the past year

  • Currently unprofitable and not forecast to become profitable over the next 3 years

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