Insiders At Amneal Pharmaceuticals Sold US$48m In Stock, Alluding To Potential Weakness

Over the past year, many Amneal Pharmaceuticals, Inc. (NASDAQ:AMRX) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, if numerous insiders are selling, shareholders should investigate more.

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.

The Last 12 Months Of Insider Transactions At Amneal Pharmaceuticals

In the last twelve months, the biggest single sale by an insider was when the insider, Tushar Patel, sold US$42m worth of shares at a price of US$8.35 per share. That means that an insider was selling shares at slightly below the current price (US$8.89). 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 9.3% of Tushar Patel's holding.

Insiders in Amneal Pharmaceuticals didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Amneal Pharmaceuticals

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Insiders At Amneal Pharmaceuticals Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Amneal Pharmaceuticals. In total, insiders sold US$45m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership Of Amneal Pharmaceuticals

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Amneal Pharmaceuticals insiders own 49% of the company, currently worth about US$1.3b based on the recent share price. 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 Amneal Pharmaceuticals Insiders?

Insiders sold Amneal Pharmaceuticals shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. It is good to see high insider ownership, but the insider selling leaves us cautious. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 2 warning signs for Amneal Pharmaceuticals (1 is a bit concerning!) that we believe deserve your full attention.

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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.