It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Protara Therapeutics, Inc. (NASDAQ:TARA).
What Is Insider Buying?
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.
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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Protara Therapeutics Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the insider, Randall Marshall, sold US$791k worth of shares at a price of US$35.45 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of US$21.16. So it may not tell us anything about how insiders feel about the current share price. Randall Marshall was the only individual insider to sell shares in the last twelve months.
Randall Marshall sold a total of 68.42k shares over the year at an average price of US$25.83. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insider Ownership of Protara Therapeutics
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 Protara Therapeutics insiders own 13% of the company, worth about US$32m. 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 Protara Therapeutics Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. Still, the insider transactions at Protara Therapeutics in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 3 warning signs for Protara Therapeutics (2 make us uncomfortable!) that we believe deserve your full attention.
Of course Protara Therapeutics 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, but not derivative transactions.
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What are the risks and opportunities for Protara Therapeutics?
Trading at 97.9% below our estimate of its fair value
Makes less than USD$1m in revenue ($0)
Does not have a meaningful market cap ($39M)
Currently unprofitable and not forecast to become profitable over the next 3 years
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. 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.
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