Despite Hitting US$3.65, COMPASS Pathways Insiders Still Sold Too Soon

COMPASS Pathways plc's (NASDAQ:CMPS) value has fallen 18% in the last week, but insiders who sold US$247k worth of stock over the last year have had less success. Insiders might have been better off holding onto their shares, given that the average selling price of US$7.90 is still below the current share price.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for COMPASS Pathways

The Last 12 Months Of Insider Transactions At COMPASS Pathways

In the last twelve months, the biggest single sale by an insider was when the insider, Ekaterina Malievskaia, sold US$123k worth of shares at a price of US$7.91 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$3.65). So it may not shed much light on insider confidence at current levels.

In the last year COMPASS Pathways insiders didn't buy any company stock. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Insider Ownership

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. We usually like to see fairly high levels of insider ownership. Insiders own 11% of COMPASS Pathways shares, worth about US$39m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At COMPASS Pathways Tell Us?

It doesn't really mean much that no insider has traded COMPASS Pathways shares in the last quarter. We don't take much encouragement from the transactions by COMPASS Pathways insiders. The modest level of insider ownership is, at least, some comfort. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To that end, you should learn about the 4 warning signs we've spotted with COMPASS Pathways (including 2 which are potentially serious).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 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.