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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 before you buy or sell Global Blood Therapeutics, Inc. (NASDAQ:GBT), 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. 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'.
Global Blood Therapeutics Insider Transactions Over The Last Year
The Independent Director Willie Brown made the biggest insider purchase in the last 12 months. That single transaction was for US$524k worth of shares at a price of US$52.37 each. That implies that an insider found the current price of US$52.88 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for Global Blood Therapeutics share holders is that an insider was buying at near the current price. Willie Brown was the only individual insider to buy shares in the last twelve months.
You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Global Blood Therapeutics Insiders Are Selling The Stock
The last three months saw significant insider selling at Global Blood Therapeutics. Specifically, Chief Scientific Officer Brian Cathers ditched US$140k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Does Global Blood Therapeutics Boast High Insider Ownership?
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. Global Blood Therapeutics insiders own about US$80m worth of shares. That equates to 2.5% of the company. 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 Global Blood Therapeutics Insider Transactions Indicate?
An insider sold Global Blood Therapeutics shares recently, but they didn't buy any. On the other hand, the insider transactions over the last year are encouraging. We like that insiders own a fair amount of the company. So we're happy enough to look past some selling. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that Global Blood Therapeutics has 3 warning signs and it would be unwise to ignore them.
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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