Should You Take Comfort From Insider Transactions At Cerus Corporation (NASDAQ:CERS)?

By
Simply Wall St
Published
September 08, 2020
NasdaqGM:CERS

It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell Cerus Corporation (NASDAQ:CERS), you may well want to know whether insiders have been buying or selling.

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

Check out our latest analysis for Cerus

The Last 12 Months Of Insider Transactions At Cerus

The Chief Legal Officer & General Counsel, Chrystal Menard, made the biggest insider sale in the last 12 months. That single transaction was for US$115k worth of shares at a price of US$5.67 each. That means that an insider was selling shares at slightly below the current price (US$5.81). 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 22% of Chrystal Menard's stake. The only individual insider seller over the last year was Chrystal Menard.

In the last twelve months insiders purchased 60.76k shares for US$254k. On the other hand they divested 20.35k shares, for US$115k. In the last twelve months there was more buying than selling by Cerus insiders. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
NasdaqGM:CERS Insider Trading Volume September 8th 2020

Cerus is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership of Cerus

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Cerus insiders own 2.3% of the company, worth about US$22m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Cerus Insiders?

The fact that there have been no Cerus insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Cerus and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Cerus. You'd be interested to know, that we found 3 warning signs for Cerus and we suggest you have a look.

Of course Cerus may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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, but not derivative transactions.

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This article by Simply Wall St is general in nature. 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.
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