Don't Ignore The Fact That This Insider Just Sold Some Shares In Aroa Biosurgery Limited (ASX:ARX)

Anyone interested in Aroa Biosurgery Limited (ASX:ARX) should probably be aware that the Independent Non-Executive Director, John Diddams, recently divested AU$239k worth of shares in the company, at an average price of AU$1.19 each. That sale was 20% of their holding, so it does make us raise an eyebrow.

See our latest analysis for Aroa Biosurgery

Aroa Biosurgery Insider Transactions Over The Last Year

In fact, the recent sale by John Diddams was the biggest sale of Aroa Biosurgery shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was below the current price of AU$1.22, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 20%of John Diddams's holding.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Aroa Biosurgery insiders own about AU$100m worth of shares. That equates to 27% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Aroa Biosurgery Tell Us?

An insider hasn't bought Aroa Biosurgery stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. While insiders do own shares, they don't own a heap, and they have been selling. We're in no rush to buy! 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. Case in point: We've spotted 2 warning signs for Aroa Biosurgery you should be aware of.

But note: Aroa Biosurgery 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, but not derivative transactions.

If you’re looking to trade Aroa Biosurgery, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.