Processa Pharmaceuticals, Inc.'s (NASDAQ:PCSA) recent US$11m market cap decline means a loss of US$80k for insiders who bought this year

Simply Wall St
March 17, 2022
Source: Shutterstock

Insiders who bought US$164k worth of Processa Pharmaceuticals, Inc.'s (NASDAQ:PCSA) stock at an average buy price of US$6.42 over the last year may be disappointed by the recent 18% decrease in the stock. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth US$83k which is not ideal.

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.

See our latest analysis for Processa Pharmaceuticals

Processa Pharmaceuticals Insider Transactions Over The Last Year

The Co-Founder David Young made the biggest insider purchase in the last 12 months. That single transaction was for US$77k worth of shares at a price of US$7.67 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$3.27). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Happily, we note that in the last year insiders paid US$164k for 25.50k shares. On the other hand they divested 11.55k shares, for US$53k. Overall, Processa Pharmaceuticals insiders were net buyers during the last year. Their average price was about US$6.42. These transactions suggest that insiders have considered the current price attractive. 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!

NasdaqCM:PCSA Insider Trading Volume March 17th 2022

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

Have Processa Pharmaceuticals Insiders Traded Recently?

The last three months saw some Processa Pharmaceuticals insider selling. Independent Director Justin Yorke sold just US$6.1k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the volume sold is so low that it really doesn't bother us.

Insider Ownership of Processa Pharmaceuticals

Many investors like to check how much of a company is owned by 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. Insiders own 16% of Processa Pharmaceuticals shares, worth about US$8.4m. 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 Processa Pharmaceuticals Insiders?

While there has not been any insider buying in the last three months, there has been selling. But the sales were small, so we're not concerned. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Processa Pharmaceuticals and their transactions don't cause us concern. While we like knowing 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. For example, Processa Pharmaceuticals has 5 warning signs (and 1 which is a bit unpleasant) we think you should know about.

Of course Processa 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, but not derivative transactions.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.