Finance

Dissecting the Insider Trading Patterns of Valeant Pharmaceuticals International, Inc. (VRX)

Recent insider trends for Valeant Pharmaceuticals International, Inc. (NYSE:VRX) have caught the attention of investors. Analysts study insider data to get a sense of sense of what key shareholders think about the outlook for a particular stock. In the case of VRX, the data has some interesting implications for where the stock might be headed.

Institutions own 51.24% of Valeant Pharmaceuticals International, Inc. (VRX)’s shares. The total value of these holdings, in millions, is $2,548. Among active positions in the latest quarter, 162 holders increased their positions by a total of 33.43 million shares, 144 holders decreased the positions by a total of 32.6 million shares, and 69 holders held their positions. This works out to a net increase in ownership of 833191 shares, and suggests that institutions are feeling bullish about the stock.

Among new and sold out positions, 53 holders initiated new positions by a total of 10.19 million shares and 57 holders exited their positions by a total of 11.63 million shares. This nets out to a decrease of 1.44 million shares and is another bearish sign for VRX.

In the last three months, insiders executed a total of 9 trades. 6 of these were buys and 3 were sells. Insider ownership increased by a total of 964293 shares, which suggests that VRX’s key executives are feeling more optimistic about the outlook for the stock. The data from the past twelve months tells a different story: insiders executed 37 buys and 14 sells, and ownership decreased by a net of 17.13 million shares.



Analysts often look at short interest, or the number of shares currently being shorted by investors, to aid in their outlook for a particular stock. Valeant Pharmaceuticals International, Inc. (NYSE:VRX)’s short interest is 36.9 million shares, or 11.98% of the float. This represents a decrease of -5% in the number of shares being shorted compared to the previous reading, and implies that investors felt less pessimistic about the stock during the past two weeks.

Supplementing insider data with technical indicators can help an investor form a more complete view on the outlook for a stock. A composite of 13 technical indicators that includes measures such as moving averages and momentum oscillators suggests that VRX is a sell, which implies that VRX is expected to underperform the market based on prior trading patterns.

Conclusion




Institutional ownership trends suggest that the stock is cheap and the insider trading data indicates that insiders are bullish. Technical indicators (also) suggest that Valeant Pharmaceuticals International, Inc. (NYSE:VRX) is overvalued.

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