Insiders Could Have Profited By Holding onto Arrowhead Pharmaceuticals Shares Despite 23% Drop

Despite the fact that Arrowhead Pharmaceuticals, Inc.'s (NASDAQ:ARWR) value has dropped 23% in the last week insiders who sold US$1.5m worth of stock in the past 12 months have had less success. Insiders might have been better off holding onto their shares, given that the average selling price of US$17.47 is still below the current share price.

Although we don't think shareholders should simply follow insider transactions, 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 Arrowhead Pharmaceuticals

Over the last year, we can see that the biggest insider sale was by the Chairman, Christopher Anzalone, for US$775k worth of shares, at about US$15.07 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$10.68). So it may not shed much light on insider confidence at current levels.

In total, Arrowhead Pharmaceuticals 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 click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

View our latest analysis for Arrowhead Pharmaceuticals

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).

Arrowhead Pharmaceuticals Insiders Are Selling The Stock

The last three months saw significant insider selling at Arrowhead Pharmaceuticals. In total, insiders sold US$972k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Insiders own 4.9% of Arrowhead Pharmaceuticals shares, worth about US$66m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Arrowhead Pharmaceuticals Insider Transactions Indicate?

Insiders sold Arrowhead Pharmaceuticals shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Arrowhead Pharmaceuticals. Case in point: We've spotted 4 warning signs for Arrowhead Pharmaceuticals you should be aware of.

But note: Arrowhead 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.

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.