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 shareholders might well want to know whether insiders have been buying or selling shares in Amneal Pharmaceuticals, Inc. (NYSE:AMRX).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. 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.'
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The Last 12 Months Of Insider Transactions At Amneal Pharmaceuticals
Over the last year, we can see that the biggest insider sale was by the Senior VP & Chief Human Resources Officer, Nikita Shah, for US$1.2m worth of shares, at about US$23.46 per share. While we don't usually like to see insider selling, it's more concerning if the sales take price at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$8.25. So it is hard to draw any strong conclusion from it.
In the last twelve months insiders purchased 75000 shares for US$793k. But insiders sold 85043 shares worth US$1.7m. Over the last year we saw more insider selling of Amneal Pharmaceuticals shares, than buying. The average sell price was around US$20.45. Insider selling doesn't make us excited to buy. But we note that the selling, on average, was at well above the recently traded price of US$8.25. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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Amneal Pharmaceuticals Insiders Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at Amneal Pharmaceuticals. Insiders spent US$793k on shares. But we did see Independent Director Peter Terreri sell shares worth US$289k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
For a common shareholder, it is worth checking how many shares are held by company 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. From our data, it seems that Amneal Pharmaceuticals insiders own 0.3% of the company, worth about US$8.5m. However, it's possible that insiders might have an indirect interest through a more complex structure. Whilst better than nothing, we're not overly impressed by these holdings.
What Might The Insider Transactions At Amneal Pharmaceuticals Tell Us?
It's certainly positive to see the recent insider purchases. But we can't say the same for the transactions over the last 12 months. The transactions over the last year don't give us confidence, and nor does the fairly low insider ownership, but at least the recent buying is a positive. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Amneal Pharmaceuticals.
Of course Amneal Pharmaceuticals may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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.