Stock Analysis

Have Insiders Been Selling NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) Shares?

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NasdaqGS:NGM
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We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in NGM Biopharmaceuticals, Inc. (NASDAQ:NGM).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.

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'.

View our latest analysis for NGM Biopharmaceuticals

NGM Biopharmaceuticals Insider Transactions Over The Last Year

The Founder, Jin-Long Chen, made the biggest insider sale in the last 12 months. That single transaction was for US$335k worth of shares at a price of US$17.95 each. That means that an insider was selling shares at slightly below the current price (US$22.78). 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. 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 1.7% of Jin-Long Chen's stake.

In the last year NGM Biopharmaceuticals 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. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NasdaqGS:NGM Insider Trading Volume November 26th 2020

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 6.2% of NGM Biopharmaceuticals shares, worth about US$97m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At NGM Biopharmaceuticals Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. Our analysis of NGM Biopharmaceuticals insider transactions leaves us cautious. The modest level of insider ownership is, at least, some comfort. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 4 warning signs for NGM Biopharmaceuticals (1 can't be ignored!) and we strongly recommend you look at them before investing.

But note: NGM Biopharmaceuticals 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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