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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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’.
Rhythm Pharmaceuticals Insider Transactions Over The Last Year
There wasn’t any very large single transaction over the last year, but we can still observe some trading.
The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Rhythm Pharmaceuticals better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Rhythm Pharmaceuticals Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Rhythm Pharmaceuticals insiders own about US$39m worth of shares. That equates to 3.8% 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.
So What Do The Rhythm Pharmaceuticals Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded Rhythm Pharmaceuticals shares in the last quarter. Our analysis of Rhythm Pharmaceuticals insider transactions leaves us cautious. But it’s good to see that insiders own shares in the company. Of course, the future is what matters most. So if you are interested in Rhythm Pharmaceuticals, you should check out this free report on analyst forecasts for the company.
But note: Rhythm Pharmaceuticals may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. On rare occasion, data errors may occur. Thank you for reading.