Benzinga | Apr 9, 2021 11:18AM EDT

Insider Buys Crinetics Pharmaceuticals Shares



A Form 4 filing filed with the SEC on Friday, April 9 showed that Perceptive Advisors Llc bought 304,136 shares of Crinetics Pharmaceuticals Inc (NASDAQ:CRNX) at an average price of $16.44. The transaction moved the executive's stake in Crinetics Pharmaceuticals Inc. to 3,963,517 shares. Shares of Crinetics Pharmaceuticals fell by 1.5% from the previous closing price.

The Importance of Insider Transactions

While transactions from an insider shouldn't be used as the sole item to make an investment or trading decision, an insider buying or selling stock in their company can be a good added factor that leads to more conviction in a decision.

When an insider buys stock after an important sell off, that can indicate the insider's faith in the success of the organization. Henceforth, if the stock is bought at new highs, it might be because the insider feels that the stock is not overvalued. Conversely, insiders who are selling stock at new lows can potentially indicate some kind of capitulation moment. Insiders selling at new highs can indicate that exec wants to "take some profit" and "lock in a gain."

Transaction Codes To Focus On

Investors prefer focusing on transactions which take place in the open market, indicated in the Form 4 with codes P for purchase and S for sale. An open-market transaction means the insider went into the market of their own volition and made an active decision about the potential path for a company and its stock moving forward.

Transaction codes besides P or S aren't relatively important as they are seldom tied to a decision by the executive. For example, transaction code A is indicative of an insider being forced to sell shares to attain compensation. Moreover, transaction code C indicates the conversion of an option.