Don't Ignore The Insider Selling In Ligand Pharmaceuticals

Anyone interested in Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) should probably be aware that the Chief Financial Officer, Octavio Espinoza, recently divested US$245k worth of shares in the company, at an average price of US$116 each. On the bright side, that sale was only 9.2% of their holding, so we doubt it's very meaningful, on its own.

View our latest analysis for Ligand Pharmaceuticals

The Last 12 Months Of Insider Transactions At Ligand Pharmaceuticals

The insider, Matthew Korenberg, made the biggest insider sale in the last 12 months. That single transaction was for US$2.0m worth of shares at a price of US$106 each. That means that even when the share price was slightly below the current price of US$107, 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. 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. This single sale was just 28% of Matthew Korenberg's stake.

Over the last year we saw more insider selling of Ligand Pharmaceuticals shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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).

Does Ligand Pharmaceuticals Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Ligand Pharmaceuticals insiders own about US$39m worth of shares. That equates to 1.9% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Ligand Pharmaceuticals Tell Us?

An insider hasn't bought Ligand Pharmaceuticals stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. But since Ligand Pharmaceuticals is profitable and growing, we're not too worried by this. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. You'd be interested to know, that we found 3 warning signs for Ligand Pharmaceuticals and we suggest you have a look.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.