Enanta Pharmaceuticals Insider Sellers Vindicated After 15% Drop

Over the past year, insiders sold US$325k worth of Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) stock at an average price of US$9.40 per share allowing them to get the most out of their money. The company’s market cap plunged by US$54m after price dropped by 15% last week but insiders were able to limit their loss to an extent.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Enanta Pharmaceuticals

The Last 12 Months Of Insider Transactions At Enanta Pharmaceuticals

In the last twelve months, the biggest single sale by an insider was when the Independent Director, Terry Vance, sold US$139k worth of shares at a price of US$9.12 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$14.00. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was 73% of Terry Vance's stake.

In the last year Enanta Pharmaceuticals insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insider Ownership

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Enanta Pharmaceuticals insiders own about US$20m worth of shares. That equates to 6.2% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Enanta Pharmaceuticals Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Enanta Pharmaceuticals shares in the last quarter. Still, the insider transactions at Enanta Pharmaceuticals in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. You'd be interested to know, that we found 1 warning sign for Enanta Pharmaceuticals and we suggest you have a look.

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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.

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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.