Trade Alert: Independent Director Of Insmed Leo Lee Has Sold Stock

We wouldn't blame Insmed Incorporated (NASDAQ:INSM) shareholders if they were a little worried about the fact that Leo Lee, the Independent Director recently netted about US$15m selling shares at an average price of US$196. That diminished their holding by a very significant 60%, which arguably implies a strong desire to reallocate capital.

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The Last 12 Months Of Insider Transactions At Insmed

In fact, the recent sale by Leo Lee was the biggest sale of Insmed shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was slightly below the current price of US$200, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was 60% of Leo Lee's stake.

All up, insiders sold more shares in Insmed than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Check out our latest analysis for Insmed

I will like Insmed better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Does Insmed 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insmed insiders own about US$286m worth of shares (which is 0.7% of the company). 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 Insmed Insiders?

Insiders sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we found 2 warning signs for Insmed that deserve your attention before buying any shares.

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 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.