Phathom Pharmaceuticals, Inc. (NASDAQ:PHAT) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 45% resulting in a US$164m addition to the company's market value. In other words, the original US$249.8k purchase is now worth US$291.9k.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Phathom Pharmaceuticals
The Chief Financial & Business Officer, Molly Henderson, made the biggest insider sale in the last 12 months. That single transaction was for US$111k worth of shares at a price of US$8.95 each. That means that an insider was selling shares at slightly below the current price (US$9.29). 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. This single sale was just 29% of Molly Henderson's stake. The only individual insider seller over the last year was Molly Henderson.
In the last twelve months insiders purchased 31.42k shares for US$250k. But insiders sold 20.93k shares worth US$175k. 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. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Phathom Pharmaceuticals Insiders Are Selling The Stock
The last three months saw some Phathom Pharmaceuticals insider selling. Chief Financial & Business Officer Molly Henderson sold just US$49k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the selling simply isn't sufficiently substantial to be of much use as a signal.
Insider Ownership Of Phathom Pharmaceuticals
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Insiders own 4.0% of Phathom Pharmaceuticals shares, worth about US$21m. 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 Phathom Pharmaceuticals Insider Transactions Indicate?
Our data shows a little more insider selling, but no insider buying, in the last three months. However, the sales are not big enough to concern us at all. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Phathom Pharmaceuticals and their transactions don't cause us concern. 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. Case in point: We've spotted 6 warning signs for Phathom Pharmaceuticals you should be aware of, and 3 of them are a bit concerning.
But note: Phathom Pharmaceuticals may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.