While Fate Therapeutics, Inc. (NASDAQ:FATE) shareholders have had a good week with the stock up 21%, insiders can't say the same having sold stock over the past year. The return on their investment would have been much higher had they held on to their stock.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

The Last 12 Months Of Insider Transactions At Fate Therapeutics

Over the last year, we can see that the biggest insider sale was by the President, Bahram Valamehr, for US$54k worth of shares, at about US$1.88 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$2.92. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 20% of Bahram Valamehr's stake.

Fate Therapeutics insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

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Insiders At Fate Therapeutics Have Sold Stock Recently

The last quarter saw substantial insider selling of Fate Therapeutics shares. Specifically, insiders ditched US$103k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Does Fate Therapeutics Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Our data indicates that Fate Therapeutics insiders own about US$5.1m worth of shares (which is 1.5% of the company). Whilst better than nothing, we're not overly impressed by these holdings.

What Might The Insider Transactions At Fate Therapeutics Tell Us?

Insiders sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. When you combine this with the relatively low insider ownership, we are very cautious about the stock. So we're not rushing to buy, to say the least. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing.

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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.

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.