Eye on Insiders: Amgen

Watching insiders is like participating in a weeks-long stakeout. You expect something to happen, but you don't know what. So you settle in, sip your coffee, and wait for clues to solving the big case.

Here, the "case" is direction: Which way is your stock headed? The "clues" come in the form of insider buying and selling action. Have a look at Amgen (Nasdaq: AMGN  ) over the past year.

Insider Rating

Bearish
Volume sales over much of the past year, and at prices below what the stock trades for presently.

Business Description

One of the world's largest and most successful biotechs.

Recent Price

$53.71

CAPS Stars (out of 5)

****

Percentage of Shares Owned by Insiders

0.13%

Net Buying (Selling)*

($9.59 million)

Last Buyer (% Increase)

Vance Coffman, Director
8,265 shares at $60.50 apiece on Nov. 5, 2008
(Purchase bolstered direct holdings by 344%)

Last Seller (% Decrease)

Brian McNamee, Sr. VP Human Resources
10,000 shares at $51.55 apiece on June 3
(Sale represented 18% of direct holdings)

Competitors

Novartis (NYSE: NVS  )
Sanofi-Aventis (NYSE: SNY  )

CAPS Members Bullish on AMGN Also Bullish on

Johnson & Johnson (NYSE: JNJ  )

CAPS Members Bearish on AMGN Also Bearish on

Starbucks (Nasdaq: SBUX  )
Citigroup (NYSE: C  )

Recent Foolish Coverage of AMGN

Good Luck in 2010, Amgen
Still Waiting for Its Blockbuster
Pharma's Next Home Run Drug Could Be 4 Singles Instead

Sources: Form 4 Oracle, Capital IQ, and Motley Fool CAPS. Data current as of Oct. 28.
*Open market sales and purchases only.

What we're tracking here, and why
Insider buying data can be confusing. Here, I'm concentrating only on buying and selling conducted in the open market. With most of these transactions, insiders control the timing. Other times they're buying or selling under the purview of a 10b5-1 plan. Either way, personal holdings are being bought and sold.

Those personal holdings matter the most -- they're the shares executives hold for investment, rather than compensation. Employee stock options are different; they're compensatory in the purest sense. I've stripped out options-related buying and selling from the calculations you see above.

The Foolish view: Bearish
Biotech isn't my beat, but I can tell when a business is beleaguered, and Amgen definitely fits the bill. A U.K. trust is suing the company and industry peer Wyeth, now a subsidiary of Pfizer (NYSE: PFE  ) . The Mathilda and Terence Kennedy Institute of Rheumatology Trust alleges that the companies' Enbrel treatment for rheumatoid arthritis violates a 2001 patent held by the trust, Reuters reports.

And that's not the only bad news, at least as far as CAPS investor PenicillinG is concerned. "After watching the FDA advisory meeting for denosumab, I believe Amgen will be lucky to get an osteoporosis indication as a second line treatment for women with a high risk of fractures (the PDUFA date is October 19)," this Fool wrote in early October. "Amgen was literally pounded by the panel on safety. [Eli Lilly's] Forteo (even though a once a day injection) is a better drug."

Insiders would likely dispute that claim, but there's no disputing the high volume of selling at Amgen over the past year. Even more troubling than the volume is the pricing. Executives and board members have sold at prices lower than today's. The lone buy came late last year, at north of $60 per share. But without corresponding buys from other insiders, I find this outlier to be little more than a green buoy in a sea of red.

Do you agree? Disagree? Log into Motley Fool CAPS today and tell us how you would rate Amgen.

And if you want me to take a Foolish peek at the insider action of your favorite stock, email me here or use the comments box below. I'll write this column as often as you, our readers, demand.

Get more of the inside scoop with related Foolishness:

Starbucks is a Stock Advisor selection. Johnson & Johnson is an Income Investor pick. Novartis is a Global Gains recommendation. Pfizer is an Inside Value pick. The Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool owns shares of Starbucks and is also on Twitter as @TheMotleyFool. The Fool's disclosure policy has its eye on you.


Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 29, 2009, at 4:55 PM, mmaple33 wrote:

    Come on Tim,

    The patent lawsuit, are you kidding me ? Please. No chance. If the MS stock came down every time some one sued them on alleged patent issue it would be a 2 cent stock. As for your comments on Denosumab, again all I have to say is PLEASE. Sounds like you have shorted Amgen, so just fess up.

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