When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Phathom Pharmaceuticals, Inc.'s (NASDAQ:PHAT) instance, it's good news for shareholders.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Phathom Pharmaceuticals

The Last 12 Months Of Insider Transactions At Phathom Pharmaceuticals

In fact, the recent sale by Molly Henderson was the biggest sale of Phathom Pharmaceuticals shares made by an insider individual in the last twelve months, according to our records. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$7.95). So it may not shed much light on insider confidence at current levels.

Over the last year, we can see that insiders have bought 33.92k shares worth US$265k. But they sold 22.00k shares for US$194k. In total, Phathom Pharmaceuticals insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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Insiders At Phathom Pharmaceuticals Have Sold Stock Recently

The last three months saw significant insider selling at Phathom Pharmaceuticals. In total, Chief Financial & Business Officer Molly Henderson sold US$111k 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

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Phathom Pharmaceuticals insiders own 4.0% of the company, worth about US$20m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Phathom Pharmaceuticals Tell Us?

An insider hasn't bought Phathom Pharmaceuticals stock in the last three months, but there was some selling. In contrast, they appear keener if you look at the last twelve months. We like that insiders own a fair amount of the company. So we're happy enough to look past some selling. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Phathom Pharmaceuticals has 5 warning signs (2 are concerning!) 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.

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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.