Even though Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) has fallen by 12% over the past week , insiders who sold US$3.1m worth of stock over the past year have had less luck. Insiders would probably have been better off holding on to their shares given that the average selling price of US$33.43 is still lower than the current share price.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Arrowhead Pharmaceuticals
In the last twelve months, the biggest single sale by an insider was when the Chief Financial Officer, Kenneth Myszkowski, sold US$1.4m worth of shares at a price of US$35.19 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$22.08). So it is hard to draw any strong conclusion from it.
Over the last year we saw more insider selling of Arrowhead Pharmaceuticals shares, than buying. You can see the insider transactions (by companies and 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 Arrowhead Pharmaceuticals Have Sold Stock Recently
We've seen more insider selling than insider buying at Arrowhead Pharmaceuticals recently. In that time, insiders dumped US$1.6m worth of shares. On the flip side, insider Hongbo Lu spent US$83k on purchasing shares (as mentioned above) . Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.
Insider Ownership
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Arrowhead Pharmaceuticals insiders own 3.9% of the company, worth about US$108m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Arrowhead Pharmaceuticals Tell Us?
Unfortunately, there has been more insider selling of Arrowhead Pharmaceuticals stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To assist with this, we've discovered 3 warning signs that you should run your eye over to get a better picture of Arrowhead Pharmaceuticals.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.