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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 PTC Therapeutics, Inc. (NASDAQ:PTCT).
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 on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 Therapeutics
In the last twelve months, the biggest single sale by an insider was when Chief Operating Officer Marcio Souza sold US$179k worth of shares at a price of US$34.65 per share. So we know that an insider sold shares at around the present share price of US$30.41. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price.
In the last twelve months insiders netted US$302k for 8.71k shares sold. Over the last year we saw more insider selling of Therapeutics shares, than buying. The average sell price was around US$34.69. It’s not ideal to see that insiders have sold at around the current price. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. You can see the insider transactions (by 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!
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Insiders at Therapeutics Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at Therapeutics. In total, insiders dumped US$123k 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.
Does Therapeutics Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Our data indicates that Therapeutics insiders own about US$8.7m worth of shares (which is 0.5% of the company). Whilst better than nothing, we’re not overly impressed by these holdings.
So What Do The Therapeutics Insider Transactions Indicate?
Insiders sold Therapeutics shares recently, but they didn’t buy any. And even if we look to the last year, we didn’t see any purchases. When you consider that most companies have higher levels of insider ownership, we’re a little wary. As the saying goes, only fools rush in. 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.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity 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 email@example.com.