Possible Bearish Signals With Arcutis Biotherapeutics Insiders Disposing Stock

In the last year, many Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, if numerous insiders are selling, shareholders should investigate more.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At Arcutis Biotherapeutics

The Executive VP & Chief Medical Officer, Patrick Burnett, made the biggest insider sale in the last 12 months. That single transaction was for US$522k worth of shares at a price of US$10.29 each. That means that even when the share price was below the current price of US$13.04, an insider wanted to cash in some shares. 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. It is worth noting that this sale was only 28% of Patrick Burnett's holding.

Happily, we note that in the last year insiders paid US$48k for 12.79k shares. On the other hand they divested 260.70k shares, for US$3.0m. Over the last year we saw more insider selling of Arcutis Biotherapeutics shares, than buying. The sellers received a price of around US$11.62, on average. It's not particularly great to see insiders were selling shares at below recent prices. But we wouldn't put too much weight on the insider selling. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

View our latest analysis for Arcutis Biotherapeutics

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Arcutis Biotherapeutics Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Arcutis Biotherapeutics. In total, insiders sold US$1.1m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership Of Arcutis Biotherapeutics

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Arcutis Biotherapeutics insiders own 1.8% of the company, worth about US$29m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Arcutis Biotherapeutics Insider Transactions Indicate?

Insiders sold Arcutis Biotherapeutics shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. While insiders do own shares, they don't own a heap, and they have been selling. We're in no rush to buy! While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. In terms of investment risks, we've identified 1 warning sign with Arcutis Biotherapeutics and understanding this should be part of your investment process.

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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.