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Are Insiders Buying Aileron Therapeutics, Inc. (NASDAQ:ALRN) Stock?

Simply Wall St

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Aileron Therapeutics, Inc. (NASDAQ:ALRN).

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.

Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.

Check out our latest analysis for Aileron Therapeutics

Aileron Therapeutics Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Director Josef von Rickenbach for US$111k worth of shares, at about US$0.98 per share. That means that an insider was happy to buy shares at above the current price of US$0.53. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While Aileron Therapeutics insiders bought shares last year, they didn't sell. Their average price was about US$0.72. These transactions suggest that insiders have considered the current price attractive. 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!

NasdaqGM:ALRN Recent Insider Trading, December 19th 2019
NasdaqGM:ALRN Recent Insider Trading, December 19th 2019

Aileron Therapeutics is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Aileron Therapeutics Insiders Bought Stock Recently

We saw some Aileron Therapeutics insider buying shares in the last three months. Chairman of the Board Jeffrey Bailey bought US$39k worth of shares in that time. It's good to see the insider buying, as well as the lack of recent sellers. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Based on our data, Aileron Therapeutics insiders have about 3.9% of the stock, worth approximately US$538k. We consider this fairly low insider ownership.

What Might The Insider Transactions At Aileron Therapeutics Tell Us?

Our data shows a little insider buying, but no selling, in the last three months. Overall the buying isn't worth writing home about. However, our analysis of transactions over the last year is heartening. We'd like to see bigger individual holdings. However, we don't see anything to make us think Aileron Therapeutics insiders are doubting the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Aileron Therapeutics.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.