We often see insiders buying up shares in companies that perform well over the long term. 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 PTC Therapeutics, Inc. (NASDAQ:PTCT).
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, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. 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.'
Therapeutics Insider Transactions Over The Last Year
The Chief Operating Officer, Marcio Souza, made the biggest insider sale in the last 12 months. That single transaction was for US$179k worth of shares at a price of US$34.65 each. That means that even when the share price was below the current price of US$38.60, an insider wanted to cash in some shares. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 7.7% of Marcio Souza's stake.
In the last twelve months insiders netted US$302k for 8706 shares sold. Therapeutics insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership of Therapeutics
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 0.5% of Therapeutics shares, worth about US$11m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Therapeutics Insiders?
It doesn't really mean much that no insider has traded Therapeutics shares in the last quarter. Our analysis of Therapeutics insider transactions leaves us cautious. But we do like the fact that insiders own a fair chunk of the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Therapeutics.
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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