It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Magenta Therapeutics, Inc. (NASDAQ:MGTA).
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.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.’
Magenta Therapeutics Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chair of Scientific Advisory Board & Director David Scadden for US$99k worth of shares, at about US$15.00 per share. That means that an insider was happy to buy shares at around the current price. Of course they may have changed their mind. But this suggests they are optimistic. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then.
Happily, we note that in the last year insiders bought 7.00k shares for a total of US$105k. Overall, Magenta Therapeutics insiders were net buyers last year. They paid about US$15.00 on average. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (US$16.01). You can see the insider transactions (by 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!
I will like Magenta Therapeutics better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that Magenta Therapeutics insiders own 8.8% of the company, worth about US$46m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Magenta Therapeutics Tell Us?
The fact that there have been no Magenta Therapeutics insider transactions recently certainly doesn’t bother us. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Magenta Therapeutics and we see no evidence to suggest they are worried about the future. Of course, the future is what matters most. So if you are interested in Magenta Therapeutics, you should check out this free report on analyst forecasts for the company.
But note: Magenta Therapeutics 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.
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