Insiders At Madrigal Pharmaceuticals Sold US$4.4m In Stock, Alluding To Potential Weakness

In the last year, many Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

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Madrigal Pharmaceuticals Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the CEO, President & Director, William Sibold, for US$1.6m worth of shares, at about US$244 per share. That means that an insider was selling shares at slightly below the current price (US$320). 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. 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 51% of William Sibold's holding.

In the last year Madrigal Pharmaceuticals insiders didn't buy any company stock. 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!

See our latest analysis for Madrigal Pharmaceuticals

I will like Madrigal Pharmaceuticals 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.

Insiders At Madrigal Pharmaceuticals Have Sold Stock Recently

The last quarter saw substantial insider selling of Madrigal Pharmaceuticals shares. Specifically, insiders ditched US$805k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership Of Madrigal Pharmaceuticals

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. It's great to see that Madrigal Pharmaceuticals insiders own 8.4% of the company, worth about US$571m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Madrigal Pharmaceuticals Insider Transactions Indicate?

Insiders sold Madrigal Pharmaceuticals shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Madrigal Pharmaceuticals. At Simply Wall St, we found 1 warning sign for Madrigal Pharmaceuticals that deserve your attention before buying any shares.

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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.