Are Insiders Selling Merrimack Pharmaceuticals, Inc. (NASDAQ:MACK) Stock?

We often see insiders buying up shares in companies that perform well over the long term. 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 Merrimack Pharmaceuticals, Inc. (NASDAQ:MACK).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

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'.

Check out our latest analysis for Merrimack Pharmaceuticals

Merrimack Pharmaceuticals Insider Transactions Over The Last Year

The President, Gary Crocker, made the biggest insider sale in the last 12 months. That single transaction was for US$577k worth of shares at a price of US$3.20 each. That means that an insider was selling shares at slightly below the current price (US$8.18). 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. It is worth noting that this sale was 100% of Gary Crocker's holding. Gary Crocker was the only individual insider to sell over the last year. Notably Gary Crocker was also the biggest buyer, having purchased US$77k worth of shares.

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!

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).

Insiders at Merrimack Pharmaceuticals Have Bought Stock Recently

Over the last quarter, Merrimack Pharmaceuticals insiders have spent a meaningful amount on shares. Specifically, President Gary Crocker bought US$77k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.

Does Merrimack Pharmaceuticals Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Our data isn't picking up on much insider ownership at Merrimack Pharmaceuticals, though insiders do hold about US$348k worth of shares. This level of insider ownership is notably low, and not very encouraging.

So What Does This Data Suggest About Merrimack Pharmaceuticals Insiders?

It's certainly positive to see the recent insider purchase. On the other hand the transaction history, over the last year, isn't so positive. The transactions over the last year don't give us confidence, and nor does the fairly low insider ownership, but at least the recent buying is a positive. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Case in point: We've spotted 1 warning sign for Merrimack Pharmaceuticals you should be aware of.

But note: Merrimack 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, but not derivative transactions.

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This article by Simply Wall St is general in nature. 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.
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