Island Pharmaceuticals Limited (ASX:ILA) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 13%, resulting in a AU$3.1m rise in the company's market capitalisation, translating to a gain of 158% on their initial investment. In other words, the original AU$1.39m purchase is now worth AU$3.57m.

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.

View our latest analysis for Island Pharmaceuticals

The Last 12 Months Of Insider Transactions At Island Pharmaceuticals

In the last twelve months, the biggest single purchase by an insider was when insider Jason Carroll bought AU$459k worth of shares at a price of AU$0.061 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.17. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Over the last year, we can see that insiders have bought 21.03m shares worth AU$1.4m. But they sold 3.09m shares for AU$270k. In the last twelve months there was more buying than selling by Island Pharmaceuticals insiders. 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. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

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. Insiders spent AU$864k on shares. But we did see insider Jason Carroll sell shares worth AU$126k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

Does Island Pharmaceuticals Boast High Insider Ownership?

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. It's great to see that Island Pharmaceuticals insiders own 60% of the company, worth about AU$16m. 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 we don't feel the same about the fact the company is making losses. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Island Pharmaceuticals. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Island Pharmaceuticals has 5 warning signs (3 are a bit unpleasant!) that deserve your attention before going any further with your analysis.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.