Selling Eliem Therapeutics Shares at a Lower Price Than Current Market Value May Have Been a Costly Mistake for Insiders

Eliem Therapeutics, Inc.'s (NASDAQ:ELYM) stock price has dropped 41% in the previous week, but insiders who sold US$3.4m in stock over the past year have had less luck. Insiders might have been better off holding onto their shares, given that the average selling price of US$7.16 is still below the current share price.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Eliem Therapeutics

Eliem Therapeutics Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Valerie Morisset, sold US$988k worth of shares at a price of US$8.07 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of US$4.98. So it may not shed much light on insider confidence at current levels. Valerie Morisset was the only individual insider to sell shares in the last twelve months.

Valerie Morisset ditched 473.99k shares over the year. The average price per share was US$7.16. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

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Eliem Therapeutics Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Eliem Therapeutics shares. In total, insider Valerie Morisset sold US$3.4m 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 Eliem Therapeutics

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From looking at our data, insiders own US$2.4m worth of Eliem Therapeutics stock, about 0.7% of the company. But they may have an indirect interest through a corporate structure that we haven't picked up on. We prefer to see high levels of insider ownership.

So What Does This Data Suggest About Eliem Therapeutics Insiders?

An insider sold Eliem Therapeutics shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. When you consider that most companies have higher levels of insider ownership, we're a little wary. We'd certainly practice some caution before buying! 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. At Simply Wall St, we've found that Eliem Therapeutics has 5 warning signs (3 are significant!) that deserve your attention before going any further with your analysis.

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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.