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We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At Madrigal Pharmaceuticals
Over the last year, we can see that the biggest insider sale was by Senior VP & CFO Marc Schneebaum for US$616k worth of shares, at about US$287 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$118. So it may not shed much light on insider confidence at current levels. Marc Schneebaum was the only individual insider to sell shares in the last twelve months.
In the last twelve months insiders purchased 10.00k shares for US$1.2m. But they sold 2.14k for US$616k. In total, Madrigal Pharmaceuticals insiders bought more than they sold over the last year. The average buy price was around US$122. This is nice to see since it implies that insiders might see value around current prices (around US$118). You can see a visual depiction of insider transactions (by 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 alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Madrigal Pharmaceuticals Have Bought Stock Recently
It’s good to see that Madrigal Pharmaceuticals insiders have made notable investments in the company’s shares. Overall, 2 insiders shelled out US$1.2m for shares in the company — and none sold. This makes one think the business has some good points.
Does Madrigal Pharmaceuticals Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Madrigal Pharmaceuticals insiders own about US$117m worth of shares (which is 6.4% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Madrigal Pharmaceuticals Insider Transactions Indicate?
It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn’t make a profit over the last twelve months, which makes us cautious. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Madrigal Pharmaceuticals. Nice! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: Madrigal 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.