We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Ligand Pharmaceuticals Incorporated (NASDAQ:LGND), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
Ligand Pharmaceuticals Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Independent Director, Stephen Sabba, for US$386k worth of shares, at about US$94.45 per share. That means that an insider was selling shares at slightly below the current price (US$101). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 15% of Stephen Sabba's holding. The only individual insider seller over the last year was Stephen Sabba.
Over the last year, we can see that insiders have bought 10350 shares worth US$1.1m. But they sold 4091 for US$386k. Overall, Ligand Pharmaceuticals insiders were net buyers last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Ligand Pharmaceuticals is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Ligand Pharmaceuticals Have Bought Stock Recently
Over the last three months, we've seen a bit of insider buying at Ligand Pharmaceuticals. In total, insiders bought US$409k worth of shares in that time. But Independent Director Stephen Sabba sold US$386k worth. While it's good to see the insider buying, the net amount bought isn't enough for us to gain much confidence from it.
Does Ligand Pharmaceuticals Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 3.0% of Ligand Pharmaceuticals shares, worth about US$59m. 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 Ligand Pharmaceuticals Tell Us?
Our data shows a little insider buying, but no selling, in the last three months. That said, the purchases were not large. However, our analysis of transactions over the last year is heartening. Insiders own shares in Ligand Pharmaceuticals and we see no evidence to suggest they are worried about the future. Of course, the future is what matters most. So if you are interested in Ligand Pharmaceuticals, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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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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. Thank you for reading.