Possible Bearish Signals With Centessa Pharmaceuticals Insiders Disposing Stock

The fact that multiple Centessa Pharmaceuticals plc (NASDAQ:CNTA) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. 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, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Centessa Pharmaceuticals

The Last 12 Months Of Insider Transactions At Centessa Pharmaceuticals

The General Counsel, Iqbal Hussain, made the biggest insider sale in the last 12 months. That single transaction was for US$1.2m worth of shares at a price of US$16.39 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$17.84. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was 76% of Iqbal Hussain's stake.

In the last year Centessa Pharmaceuticals insiders didn't buy any company stock. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Centessa Pharmaceuticals Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Centessa Pharmaceuticals. In total, insiders dumped US$4.5m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company 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. Centessa Pharmaceuticals insiders own about US$33m worth of shares. That equates to 1.4% of the company. 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 Centessa Pharmaceuticals Insider Transactions Indicate?

Insiders sold Centessa Pharmaceuticals shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Centessa Pharmaceuticals. For instance, we've identified 3 warning signs for Centessa Pharmaceuticals (1 is significant) you should be aware of.

Of course Centessa Pharmaceuticals 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 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.