Last week, Island Pharmaceuticals Limited (ASX:ILA) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 13% last week, resulting in a AU$3.1m increase in the company's market worth, implying a 180% gain on their initial purchase. As a result, the stock they originally bought for AU$964.1k is now worth AU$2.70m.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Island Pharmaceuticals

The Last 12 Months Of Insider Transactions At Island Pharmaceuticals

The insider Jason Carroll made the biggest insider purchase in the last 12 months. That single transaction was for AU$459k worth of shares at a price of AU$0.061 each. Even though the purchase was made at a significantly lower price than the recent price (AU$0.18), we still think insider buying is a positive. 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.

In the last twelve months insiders purchased 15.01m shares for AU$964k. But insiders sold 2.68m shares worth AU$191k. Overall, Island Pharmaceuticals insiders were net buyers during the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Island Pharmaceuticals is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Island Pharmaceuticals Insiders Bought Stock Recently

At Island Pharmaceuticals,over the last quarter, we have observed quite a lot more insider buying than insider selling. In fact, two insiders bought AU$462k worth of shares. But we did see insider Jason Carroll sell shares worth AU$46k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

Insider Ownership Of Island 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. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Island Pharmaceuticals insiders own 53% of the company, worth about AU$15m. 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 Island Pharmaceuticals Insiders?

It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Island Pharmaceuticals insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 5 warning signs for Island Pharmaceuticals you should be aware of, and 3 of them shouldn't be ignored.

But note: Island 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.