Insiders In Lumos Diagnostics Holdings Left Out From 11% Price Rise After Disposing Stock

Lumos Diagnostics Holdings Limited's (ASX:LDX) stock rose 11% last week, but insiders who sold US$428k worth of stock over the last year are probably in a more advantageous position. Holding on to stock would have meant their investment would be worth less now than it was at the time of sale. Thus selling at an average price of US$0.40, which is higher than the current price, may have been the best decision.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Lumos Diagnostics Holdings

The insider, David Bottomley, made the biggest insider sale in the last 12 months. That single transaction was for AU$176k worth of shares at a price of AU$0.39 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (AU$0.20). So it is hard to draw any strong conclusion from it.

Happily, we note that in the last year insiders paid AU$227k for 4.63m shares. But insiders sold 1.08m shares worth AU$428k. Over the last year we saw more insider selling of Lumos Diagnostics Holdings shares, than buying. 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!

See our latest analysis for Lumos Diagnostics Holdings

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Lumos Diagnostics Holdings Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Lumos Diagnostics Holdings shares. Specifically, insider David Bottomley ditched AU$176k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Does Lumos Diagnostics Holdings Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. Our data indicates that Lumos Diagnostics Holdings insiders own about AU$7.5m worth of shares (which is 4.2% of the company). However, it's possible that insiders might have an indirect interest through a more complex structure. We do generally prefer see higher levels of insider ownership.

What Might The Insider Transactions At Lumos Diagnostics Holdings Tell Us?

An insider sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. When you consider that most companies have higher levels of insider ownership, we're a little wary. So we're not rushing to buy, to say the least. 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. To assist with this, we've discovered 3 warning signs that you should run your eye over to get a better picture of Lumos Diagnostics Holdings.

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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.