We wouldn't blame Verona Pharma plc (NASDAQ:VRNA) shareholders if they were a little worried about the fact that David Zaccardelli, the President recently netted about US$2.3m selling shares at an average price of US$3.76. That sale reduced their total holding by 28% which is hardly insignificant, but far from the worst we've seen.
The Last 12 Months Of Insider Transactions At Verona Pharma
In fact, the recent sale by David Zaccardelli was the biggest sale of Verona Pharma shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was below the current price of US$29.78, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 28% of David Zaccardelli's holding.
Over the last year, we can see that insiders have bought 28.72k shares worth US$481k. But they sold 1.25m shares for US$5.8m. Over the last year we saw more insider selling of Verona Pharma shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. 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
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. Verona Pharma insiders own 4.7% of the company, currently worth about US$114m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Verona Pharma Insider Transactions Indicate?
The stark truth for Verona Pharma is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. For instance, we've identified 3 warning signs for Verona Pharma (1 doesn't sit too well with us) you should be aware of.
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.