- If the buyer/seller is clearly informed about future developments (C-level executives, not Jr. VP's)
- If the transaction happens on the open market, not part of a 10b5-1 plan.
- If the transaction is sufficiently large to be meaningful to the individual. For example if a CEO who makes $1M a year buys $10,000 worth stock, that is meaningless.
With this criteria in mind, I dove into the insider transaction data, which I've show all the 2014 activity below.
It appears that Mr. Anzalone has not sold any shares in 2014, and I don't see any shares sold in years past.
However, other insiders seemed to have actively sold shares, by converting their options and selling the proceeds. The best trader among them seem to be the CFO, having sold at $18.77 in February, and $14.02 in August. His gross proceeds from these two sales are $861,150 or net $576,140 when you include the cost of exercising the options.
It is also interesting to note that the CFO and a Director sold on the same day (August 15th) and the CFO got a better price. Perhaps he is a good trader.
Going back to our criteria outlined above:
- The CEO's purchase yesterday is an open market buy,
- He is in the position to know about the companies future prospects,
- Do the represent a meaningful amount to Dr. Anzalone? He earned $579,808 in cash, and $463,393 in option awards from Arrowhead in 2013. Additionally, he owned 244,173 ARWR shares, plus 786,466 options, some of which are underwater.
I would say that the purchase of $101,120 of ARWR stock, of which he already has a very large position, is a meaningful amount, but not tremendously meaningful.
Keep in mind, I am not implying anything improper occurs when insiders sell, rather I believe some insiders are in the position to know the intrinsic value of the company better than other investors, and therefor in a position to buy an undervalued stock and sell an overvalued stock.
Geek note: I am using insider transaction data from OpenInsider.com.
Disclosure, I am long Arrowhead Research.