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 before you buy or sell Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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, 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 equally, we would consider it foolish to ignore insider transactions altogether. 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 Rocket Pharmaceuticals
In the last twelve months, the biggest single sale by an insider was when Director David Southwell sold US$589k worth of shares at a price of US$15.19 per share. That means that an insider was selling shares at around the current price of US$14.55. They might be selling for a variety of reasons, but it's hard to argue this is a bullish sign. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price. David Southwell was the only individual insider to sell shares in the last twelve months.
You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this freelist of companies. (Hint: insiders have been buying them).
Insiders at Rocket Pharmaceuticals Have Sold Stock Recently
We've seen more insider selling than insider buying at Rocket Pharmaceuticals recently. We note David Southwell cashed in US$589k worth of shares. Meanwhile Chief Operating Officer & Head of Development Kinnari Patel bought US$85k worth, as we said above. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
Insider Ownership of Rocket 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 Rocket Pharmaceuticals insiders own 2.2% of the company, worth about US$14m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Rocket Pharmaceuticals Insiders?
The stark truth for Rocket Pharmaceuticals is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. While insiders do own shares, they don't own a heap, and they have been selling. We'd think twice before buying! Therefore, you should should definitely take a look at this FREEreport showing analyst forecasts for Rocket Pharmaceuticals.
But note: Rocket Pharmaceuticals may not be the best stock to buy. So take a peek at this freelist of interesting companies with high ROE and low debt.
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