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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Ardelyx, Inc. (NASDAQ:ARDX).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. 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'.
The Last 12 Months Of Insider Transactions At Ardelyx
Notably, that recent purchase by David Mott is the biggest insider purchase of Ardelyx shares that we've seen in the last year. So it's clear an insider wanted to buy, at around the current price, which is US$5.90. That means they have been optimistic about the company in the past, though they may have changed their mind. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Ardelyx share holders is that insiders were buying at near the current price.
Happily, we note that in the last year insiders paid US$2.0m for 315.71k shares. But insiders sold 281.46k shares worth US$1.6m. Overall, Ardelyx insiders were net buyers during the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Ardelyx is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Ardelyx Insiders Are Selling The Stock
Over the last three months, we've seen notably more insider selling, than insider buying, at Ardelyx. In that time, insiders dumped US$1.4m worth of shares. Meanwhile Independent Chairman David Mott bought US$1.0m worth. Generally this level of net selling might be considered a bit bearish.
Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data indicates that Ardelyx insiders own about US$7.5m worth of shares (which is 1.4% of the company). Whilst better than nothing, we're not overly impressed by these holdings.
So What Do The Ardelyx Insider Transactions Indicate?
The stark truth for Ardelyx is that there has been more insider selling than insider buying in the last three months. In contrast, they appear keener if you look at the last twelve months. Still, insiders don't own a great deal of the stock. So we can't be sure that insiders are optimistic. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 2 warning signs for Ardelyx 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.
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. 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.
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