Bullish insiders at Merrimack Pharmaceuticals, Inc. (NASDAQ:MACK) loaded up on US$574k of stock earlier this year
It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Merrimack Pharmaceuticals, Inc.'s (NASDAQ:MACK) case, it's fantastic news for shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
See our latest analysis for Merrimack Pharmaceuticals
The Last 12 Months Of Insider Transactions At Merrimack Pharmaceuticals
The President Gary Crocker made the biggest insider purchase in the last 12 months. That single transaction was for US$80k worth of shares at a price of US$6.20 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$5.91). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Over the last year, we can see that insiders have bought 111.66k shares worth US$574k. On the other hand they divested 1.00k shares, for US$3.8k. Overall, Merrimack Pharmaceuticals insiders were net buyers during the last year. They paid about US$5.14 on average. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. 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!
Merrimack Pharmaceuticals is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Merrimack Pharmaceuticals Insiders Bought Stock Recently
Over the last quarter, Merrimack Pharmaceuticals insiders have spent a meaningful amount on shares. President Gary Crocker spent US$110k on stock, and there wasn't any selling. This makes one think the business has some good points.
Does Merrimack Pharmaceuticals Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data suggests Merrimack Pharmaceuticals insiders own 1.3% of the company, worth about US$993k. I generally like to see higher levels of ownership.
So What Do The Merrimack Pharmaceuticals Insider Transactions Indicate?
The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Merrimack Pharmaceuticals insiders are reasonably well aligned, and optimistic for the future. 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. For instance, we've identified 2 warning signs for Merrimack Pharmaceuticals (1 doesn't sit too well with us) you should be aware of.
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, but not derivative transactions.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
