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We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.’
The Last 12 Months Of Insider Transactions At Rhythm Pharmaceuticals
Over the last year, we can see that the biggest insider purchase was by Independent Director Todd Foley for US$10.0m worth of shares, at about US$26.42 per share. That means that an insider was happy to buy shares at above the current price of US$22.81. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it’s very important to consider the price insiders pay for shares is very important. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. The only individual insider to buy over the last year was Todd Foley.
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!
Rhythm Pharmaceuticals is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Insiders own 3.7% of Rhythm Pharmaceuticals shares, worth about US$29m. 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 Rhythm Pharmaceuticals Tell Us?
It doesn’t really mean much that no insider has traded Rhythm Pharmaceuticals shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Rhythm Pharmaceuticals and their transactions don’t cause us concern. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Rhythm Pharmaceuticals.
Of course Rhythm 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.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.