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It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Biotron Limited (ASX:BIT), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Biotron
In the last twelve months, the biggest single sale by an insider was when the Independent & Non-Executive Director, Robert Thomas, sold AU$818k worth of shares at a price of AU$0.23 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (AU$0.067). So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was Robert Thomas.
Robert Thomas ditched 5.3m shares over the year. The average price per share was AU$0.22. You can see the insider transactions (by 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!
I will like Biotron better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Biotron 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. A high insider ownership often makes company leadership more mindful of shareholder interests. From our data, it seems that Biotron insiders own 11% of the company, worth about AU$4.5m. 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 Biotron Tell Us?
It doesn’t really mean much that no insider has traded Biotron shares in the last quarter. The insider transactions at Biotron are not inspiring us to buy. And we’re not picking up on high enough insider ownership to give us any comfort. Along with insider transactions, I recommend checking if Biotron is growing revenue. This free chart of historic revenue and earnings should make that easy.
But note: Biotron 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 aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.