Should You Take Comfort From Insider Transactions At Rubius Therapeutics, Inc. (NASDAQ:RUBY)?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in Rubius Therapeutics, Inc. (NASDAQ:RUBY).

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

Check out our latest analysis for Rubius Therapeutics

The Last 12 Months Of Insider Transactions At Rubius Therapeutics

Over the last year, we can see that the biggest insider purchase was by Chief Medical Officer Christina Coughlin for US$105k worth of shares, at about US$5.52 per share. We do like to see buying, but this purchase was made at well below the current price of US$23.88. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Rubius Therapeutics insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by companies and individuals) over the last year. 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).

Insider Ownership of Rubius Therapeutics

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Rubius Therapeutics insiders own about US$156m worth of shares (which is 7.4% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Rubius Therapeutics Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. It would be great to see more insider buying, but overall it seems like Rubius Therapeutics insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Rubius Therapeutics. In terms of investment risks, we've identified 3 warning signs with Rubius Therapeutics and understanding these should be part of your investment process.

But note: Rubius Therapeutics 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.

This article by Simply Wall St is general in nature. 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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