We often see insiders buying up shares in companies that perform well over the long term. 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 we’ll take a look at whether insiders have been buying or selling shares in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN).
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, such insiders must disclose their trading activities, and not trade on inside information.
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. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
BioMarin Pharmaceutical Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by President of Worldwide Research & Development Henry Fuchs for US$2.5m worth of shares, at about US$100.00 per share. That means that an insider was selling shares at around the current price of US$91.31. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.
In the last twelve months insiders netted US$4.4m for 44.42k shares sold. Over the last year we saw more insider selling of BioMarin Pharmaceutical shares, than buying. The average sell price was around US$99.51. It’s not ideal to see that insiders have sold at around the current price. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. 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!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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. Insiders own 0.6% of BioMarin Pharmaceutical shares, worth about US$91m. 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 Do The BioMarin Pharmaceutical Insider Transactions Indicate?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. Our analysis of BioMarin Pharmaceutical insider transactions leaves us cautious. But it’s good to see that insiders own shares in the company. Of course, the future is what matters most. So if you are interested in BioMarin Pharmaceutical, you should check out this free report on analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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