We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in La Jolla Pharmaceutical Company (NASDAQ:LJPC).

What Is Insider Selling?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

See our latest analysis for La Jolla Pharmaceutical

The Last 12 Months Of Insider Transactions At La Jolla Pharmaceutical

Over the last year, we can see that the biggest insider purchase was by Independent Director David Ramsay for US$187k worth of shares, at about US$4.18 per share. Even though the purchase was made at a significantly lower price than the recent price (US$5.33), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

David Ramsay purchased 48.00k shares over the year. The average price per share was US$3.99. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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 La Jolla Pharmaceutical

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data indicates that La Jolla Pharmaceutical insiders own about US$7.8m worth of shares (which is 5.3% of the company). Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Do The La Jolla Pharmaceutical Insider Transactions Indicate?