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 before you buy or sell MyoKardia, Inc. (NASDAQ:MYOK), you may well want to know whether insiders have been buying or selling.
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.
Insider transactions are not the most important thing when it comes to long-term investing. 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.'
MyoKardia Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the insider, Anastasios Gianakakos, for US$122k worth of shares, at about US$44.11 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$54.70. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 0.4% of Anastasios Gianakakos's holding. The only individual insider seller over the last year was Anastasios Gianakakos. Notably Anastasios Gianakakos was also the biggest buyer, having purchased US$100k worth of shares.
You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like MyoKardia better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does MyoKardia Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. It appears that MyoKardia insiders own 3.0% of the company, worth about US$76m. 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 MyoKardia Tell Us?
It doesn't really mean much that no insider has traded MyoKardia shares in the last quarter. We don't take much encouragement from the transactions by MyoKardia insiders. The modest level of insider ownership is, at least, some comfort. Of course, the future is what matters most. So if you are interested in MyoKardia, 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.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.