Stock Analysis

Have Insiders Been Selling Insmed Incorporated (NASDAQ:INSM) Shares?

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NasdaqGS:INSM
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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Insmed Incorporated (NASDAQ:INSM).

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, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

See our latest analysis for Insmed

The Last 12 Months Of Insider Transactions At Insmed

The Independent Director, Melvin Sharoky, made the biggest insider sale in the last 12 months. That single transaction was for US$614k worth of shares at a price of US$31.03 each. That means that an insider was selling shares at slightly below the current price (US$37.73). 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. 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 only 7.7% of Melvin Sharoky's holding. Melvin Sharoky was the only individual insider to sell shares in the last twelve months.

Melvin Sharoky sold a total of 28.00k shares over the year at an average price of US$33.07. 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!

insider-trading-volume
NasdaqGS:INSM Insider Trading Volume March 2nd 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).

Insider Ownership of Insmed

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. It appears that Insmed insiders own 0.8% of the company, worth about US$31m. 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 Do The Insmed Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. We don't take much encouragement from the transactions by Insmed insiders. But it's good to see that insiders own shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 2 warning signs for Insmed you should know about.

Of course Insmed may not be the best stock to buy. So you may wish to see this free collection of high quality 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 Insmed?

Insmed Incorporated, a biopharmaceutical company, develops and commercializes therapies for patients with serious and rare diseases.

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Rewards

  • Trading at 91.8% below our estimate of its fair value

  • Revenue is forecast to grow 33.2% per year

Risks

  • Negative shareholders equity

  • Shareholders have been diluted in the past year

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

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1Y Return

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