Even though Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) stock gained 18% last week, insiders who sold US$5.7m worth of stock over the past year are probably better off. Selling at an average price of US$11.35, which is higher than the current price might have been the right call as holding on to stock would have meant their investment would be worth less now than it was at the time of sale.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
The Last 12 Months Of Insider Transactions At Ironwood Pharmaceuticals
In the last twelve months, the biggest single sale by an insider was when the CEO & Director, Thomas McCourt, sold US$2.7m worth of shares at a price of US$15.24 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (US$4.96). So it is hard to draw any strong conclusion from it.
Happily, we note that in the last year insiders paid US$160k for 17.60k shares. But insiders sold 501.10k shares worth US$5.7m. All up, insiders sold more shares in Ironwood Pharmaceuticals than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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Insiders At Ironwood Pharmaceuticals Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at Ironwood Pharmaceuticals. In total, insiders dumped US$56k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership Of Ironwood Pharmaceuticals
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Ironwood Pharmaceuticals insiders own 1.8% of the company, worth about US$14m. 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 Ironwood Pharmaceuticals Insiders?
Insiders haven't bought Ironwood Pharmaceuticals stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Ironwood Pharmaceuticals. To that end, you should learn about the 3 warning signs we've spotted with Ironwood Pharmaceuticals (including 1 which is concerning).
Of course Ironwood Pharmaceuticals may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
