Over the past year, insiders sold US$69k worth of Nkarta, Inc. (NASDAQ:NKTX) stock at an average price of US$2.06 per share allowing them to get the most out of their money. The company's market valuation decreased by US$24m after the stock price dropped 11% over the past week, but insiders were spared from painful losses.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Nkarta Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the CEO & Director, Paul Hastings, sold US$54k worth of shares at a price of US$2.07 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$2.81. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 14% of Paul Hastings's holding.

In the last year Nkarta insiders didn't buy any company stock. 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 Nkarta better if I see some big insider buys.

Insider Ownership

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. From what we can see in our data, insiders own only about US$820k worth of Nkarta shares. This level of insider ownership is notably low, and not very encouraging.

So What Do The Nkarta Insider Transactions Indicate?

The fact that there have been no Nkarta insider transactions recently certainly doesn't bother us. Our analysis of Nkarta insider transactions leaves us unenthusiastic. And we're not picking up on high enough insider ownership to give us any comfort. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Nkarta.

But note: Nkarta 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.

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.