Selling US$1.3m Of Ironwood Pharmaceuticals Stock Rewarded Insiders
Despite a 25% gain in Ironwood Pharmaceuticals, Inc.'s (NASDAQ:IRWD) stock price this week, shareholders shouldn't let up. Even though stock prices were relatively low, insiders elected to sell US$1.3m worth of stock in the last year, which could indicate some expected downturn.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
Ironwood Pharmaceuticals Insider Transactions Over The Last Year
The CEO & Director, Thomas McCourt, made the biggest insider sale in the last 12 months. That single transaction was for US$740k worth of shares at a price of US$3.81 each. That means that even when the share price was below the current price of US$4.39, 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 24% of Thomas McCourt's holding.
Ironwood Pharmaceuticals insiders didn't buy any shares over the last year. 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!
See our latest analysis for Ironwood Pharmaceuticals
If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.
Insider Ownership Of Ironwood Pharmaceuticals
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 3.2% of Ironwood Pharmaceuticals shares, worth about US$22m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Do The Ironwood Pharmaceuticals Insider Transactions Indicate?
There haven't been any insider transactions in the last three months -- that doesn't mean much. We don't take much encouragement from the transactions by Ironwood Pharmaceuticals insiders. The modest level of insider ownership is, at least, some comfort. 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. At Simply Wall St, we've found that Ironwood Pharmaceuticals has 3 warning signs (2 are a bit unpleasant!) that deserve your attention before going any further with your analysis.
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 of direct interests only, but not derivative transactions or indirect interests.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.