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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE), 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 on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
The Last 12 Months Of Insider Transactions At Ultragenyx Pharmaceutical
In the last twelve months, the biggest single sale by an insider was when Director William Aliski sold US$287k worth of shares at a price of US$76.66 per share. So we know that an insider sold shares at around the present share price of US$68.48. They could have a variety of motivations for selling, but it's still not particularly encouraging to see. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.
We note that in the last year insiders divested 5.09k shares for a total of US$390k. All up, insiders sold more shares in Ultragenyx Pharmaceutical than they bought, over the last year. The sellers received a price of around US$76.74, on average. It's not ideal to see that insiders have sold at around the current price. Since insiders sell for many reasons, we wouldn't put too much weight on it. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
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. I reckon it's a good sign if insiders own a significant number of shares in the company. Ultragenyx Pharmaceutical insiders own about US$228m worth of shares (which is 5.8% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Ultragenyx Pharmaceutical Insider Transactions Indicate?
The fact that there have been no Ultragenyx Pharmaceutical insider transactions recently certainly doesn't bother us. It's great to see high levels of insider ownership, but looking back at the last year, we don't gain confidence from the Ultragenyx Pharmaceutical insiders selling. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Ultragenyx Pharmaceutical may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.