Insider Traders Lose US$55k As Phathom Pharmaceuticals Drops

The recent 14% drop in Phathom Pharmaceuticals, Inc.'s (NASDAQ:PHAT) stock could come as a blow to insiders who purchased US$249.8k worth of stock at an average buy price of US$7.95 over the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth US$195.1k which is not ideal.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Phathom Pharmaceuticals

The Last 12 Months Of Insider Transactions At Phathom Pharmaceuticals

The Chief Financial & Business Officer, Molly Henderson, made the biggest insider sale in the last 12 months. That single transaction was for US$111k worth of shares at a price of US$8.95 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$6.21. So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was Molly Henderson.

Happily, we note that in the last year insiders paid US$250k for 31.42k shares. But they sold 20.93k shares for US$175k. Overall, Phathom Pharmaceuticals insiders were net buyers during the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Phathom Pharmaceuticals Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Phathom Pharmaceuticals. In total, Chief Financial & Business Officer Molly Henderson sold US$64k 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 Phathom Pharmaceuticals

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 Phathom Pharmaceuticals insiders own 4.0% of the company, worth about US$14m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Phathom Pharmaceuticals Insiders?

An insider hasn't bought Phathom Pharmaceuticals stock in the last three months, but there was some selling. But we take heart from prior transactions. It's good to see insiders are shareholders. So the recent selling doesn't worry us too much. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 7 warning signs for Phathom Pharmaceuticals (of which 3 make us uncomfortable!) you should know about.

Of course Phathom Pharmaceuticals may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.