CEOs generally have deep insight into their own companies’ operations. If these insiders are selling stock, investors should take note.
Here, we are going to highlight a large CEO sale at Dechra Pharmaceuticals (DPH:LN). Dechra Pharmaceuticals is a United Kingdom pharmaceuticals company that develops, manufactures, regulates, markets, and sells veterinary pharmaceuticals and related products for veterinarians worldwide. It’s listed on the London Stock Exchange and currently has a market capitalization of £3.47 billion.
Dechra Pharmaceuticals: insider selling
Regulatory filings show that on 17 November the CEO of Dechra Pharmaceuticals, Ian Page, sold 300,000 DPH shares at a price of £34.50 per share. This sale – which netted the insider £10.35 million – reduced his holding by circa 50%.
This CEO sale is significant because it is of a high monetary value. It also cut Page’s holding in half, which suggests he may feel that the shares are fully valued at current levels. Page has been CEO at Dechra Pharmaceuticals for 19 years which means that he is likely to know the company intimately.
The latest Q1 trading statement trading at Dechra Pharmaceuticals was stronger than expected. Its outlook was cautious, however, with the company stating: “At this early stage of the year the ongoing effect of Covid-19 on our markets is not yet certain.” While the shares have edged back recently, they continue to trade on a high P/E multiple of 35x, which means they are priced for perfection.
On the back of this news, we see the insider selling here as a bearish signal. It suggests that the experienced CEO views the stock as fully valued given the uncertain outlook for the company.