ECS Botanics Holdings Insider Sellers Vindicated After 15% Drop

Insiders at ECS Botanics Holdings Ltd (ASX:ECS) sold AU$750k worth of stock at an average price of AU$0.015 a share over the past year, making the most of their investment. After the stock price dropped 15% last week, the company's market value declined by AU$3.9m, but insiders were able to mitigate their losses.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for ECS Botanics Holdings

The Last 12 Months Of Insider Transactions At ECS Botanics Holdings

In fact, the recent sale by Alexander Keach was the biggest sale of ECS Botanics Holdings shares made by an insider individual in the last twelve months, according to our records. So it's clear an insider wanted to take some cash off the table, even below the current price of AU$0.017. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 50%of Alexander Keach's holding.

Happily, we note that in the last year insiders paid AU$170k for 11.00m shares. But insiders sold 50.00m shares worth AU$750k. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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ECS Botanics Holdings Insiders Are Selling The Stock

We've seen more insider selling than insider buying at ECS Botanics Holdings recently. In that time, Founder & Non-Executive Director Alexander Keach dumped AU$750k worth of shares. Meanwhile insiders bought AU$150k worth. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.

Does ECS Botanics Holdings Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It appears that ECS Botanics Holdings insiders own 23% of the company, worth about AU$5.1m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The ECS Botanics Holdings Insider Transactions Indicate?

Unfortunately, there has been more insider selling of ECS Botanics Holdings stock, than buying, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that ECS Botanics Holdings is growing earnings. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We're in no rush to buy! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - ECS Botanics Holdings has 3 warning signs we think you should be aware of.

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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.