Despite the fact that Alector, Inc.'s (NASDAQ:ALEC) value has dropped 12% in the last week insiders who sold US$709k worth of stock in the past 12 months have had less success. The average selling price of US$6.14 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
The Last 12 Months Of Insider Transactions At Alector
The Co-Founder, Arnon Rosenthal, made the biggest insider sale in the last 12 months. That single transaction was for US$133k worth of shares at a price of US$5.56 each. So we know that an insider sold shares at around the present share price of US$5.31. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.
In the last year Alector insiders didn't buy any company stock. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
NasdaqGS:ALEC Insider Trading Volume April 17th 2024
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Alector Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at Alector. In total, insiders sold US$282k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Alector insiders own about US$51m worth of shares. That equates to 9.5% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Alector Tell Us?
Insiders sold Alector shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. While insiders do own shares, they don't own a heap, and they have been selling. We're in no rush to buy! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Alector. While conducting our analysis, we found that Alector has 3 warning signs and it would be unwise to ignore these.
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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.