Insider Sales At Phathom Pharmaceuticals Landed A Good Price

While Phathom Pharmaceuticals, Inc. (NASDAQ:PHAT) shareholders have had a good week with the stock up 11%, insiders can't say the same having sold stock over the past year. The value of their investment would have been higher had they waited to sell their stock.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

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Phathom Pharmaceuticals Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Terrie Curran, for US$126k worth of shares, at about US$6.59 per share. That means that an insider was selling shares at slightly below the current price (US$10.47). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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 only 8.8% of Terrie Curran's holding.

Happily, we note that in the last year insiders paid US$250k for 42.50k shares. But insiders sold 41.36k shares worth US$271k. All up, insiders sold more shares in Phathom Pharmaceuticals than they bought, over the last year. The average sell price was around US$6.56. It's not particularly great to see insiders were selling shares at below recent prices. Of course, the sales could be motivated for a multitude of reasons, so we shouldn't jump to conclusions. 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!

Check out our latest analysis for Phathom Pharmaceuticals

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Phathom Pharmaceuticals Insiders Are Selling The Stock

We have seen a bit of insider selling at Phathom Pharmaceuticals, over the last three months. insider Robert Breedlove only netted US$14k selling shares, in that period. It's not great to see insider selling, nor the lack of recent buyers. But the amount sold isn't enough for us to put any weight on it.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Phathom Pharmaceuticals insiders own about US$29m worth of shares. That equates to 3.9% of the company. 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 Phathom Pharmaceuticals Tell Us?

While there has not been any insider buying in the last three months, there has been selling. However, the sales are not big enough to concern us at all. We're a little cautious about the insider selling at Phathom Pharmaceuticals. But we do like the fact that insiders own a fair chunk of the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 4 warning signs for Phathom Pharmaceuticals (2 are a bit concerning) you should be aware of.

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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.