Amgen Inc. (NASDAQ:AMGN) insiders sold US$4.9m worth of stock, a possible red flag that's yet to materialize
Despite a 5.4% gain in Amgen Inc.'s (NASDAQ:AMGN) stock price this week, shareholders shouldn't let up. In spite of the relatively cheap prices, insiders made the decision to sell US$4.9m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.
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.
Check out our latest analysis for Amgen
Amgen Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Executive VP, Jonathan Graham, sold US$3.3m worth of shares at a price of US$242 per share. That means that even when the share price was slightly below the current price of US$246, 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 40% of Jonathan Graham's holding.
Amgen insiders didn't buy any shares 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Amgen Insiders Are Selling The Stock
The last three months saw significant insider selling at Amgen. Specifically, Lead Independent Director Robert Eckert ditched US$1.6m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Does Amgen Boast High Insider Ownership?
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. It's great to see that Amgen insiders own 0.2% of the company, worth about US$206m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Amgen Insiders?
An insider sold Amgen shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. But it is good to see that Amgen is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Amgen. For example - Amgen has 2 warning signs we think you should be aware of.
But note: Amgen 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, but not derivative transactions.
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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.
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