Are Insiders Buying SQI Diagnostics Inc. (CVE:SQD) Stock?

It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in SQI Diagnostics Inc. (CVE:SQD).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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'.

View our latest analysis for SQI Diagnostics

SQI Diagnostics Insider Transactions Over The Last Year

The Non-Independent Director Wilmot Matthews made the biggest insider purchase in the last 12 months. That single transaction was for CA$1.3m worth of shares at a price of CA$0.09 each. Even though the purchase was made at a significantly lower price than the recent price (CA$0.40), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insiders at SQI Diagnostics Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at SQI Diagnostics. In total, insiders sold CA$716k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company 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. SQI Diagnostics insiders own about CA$70m worth of shares (which is 51% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The SQI Diagnostics Insider Transactions Indicate?

Insiders haven't bought SQI Diagnostics stock in the last three months, but there was some selling. But we take heart from prior transactions. On top of that, insiders own a significant portion of the company. So we're not too bothered by recent selling. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that SQI Diagnostics is showing 6 warning signs in our investment analysis, and 3 of those don't sit too well with us...

Of course SQI Diagnostics may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.

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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.
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