Some Verona Pharma plc (NASDAQ:VRNA) shareholders may be a little concerned to see that the Chief Financial Officer, Mark Hahn, recently sold a substantial US$4.4m worth of stock at a price of US$40.05 per share. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 7.9%.

The Last 12 Months Of Insider Transactions At Verona Pharma

Notably, that recent sale by Mark Hahn is the biggest insider sale of Verona Pharma shares that we've seen in the last year. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of US$40.50. 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. We note that the biggest single sale was only 7.9% of Mark Hahn's holding.

Happily, we note that in the last year insiders paid US$524k for 17.16k shares. But they sold 2.64m shares for US$24m. Over the last year we saw more insider selling of Verona Pharma shares, than buying. The sellers received a price of around US$9.10, on average. We don't gain confidence from insider selling below the recent share price. But we wouldn't put too much weight on the insider selling. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like Verona Pharma better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership Of Verona Pharma

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Verona Pharma insiders own 4.4% of the company, worth about US$145m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Verona Pharma Insiders?

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. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Verona Pharma. While conducting our analysis, we found that Verona Pharma has 1 warning sign and it would be unwise to ignore this.

But note: Verona Pharma may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.