Don't Ignore The Insider Selling In Innovent Biologics

We wouldn't blame Innovent Biologics, Inc. (HKG:1801) shareholders if they were a little worried about the fact that De-Chao Yu, the Co-Founder recently netted about HK$81m selling shares at an average price of HK$46.38. However, that sale only accounted for 1.6% of their holding, so arguably it doesn't say much about their conviction.

Check out our latest analysis for Innovent Biologics

Innovent Biologics Insider Transactions Over The Last Year

In fact, the recent sale by De-Chao Yu was the biggest sale of Innovent Biologics shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at slightly below the current price (HK$51.15). 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. 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 1.6% of De-Chao Yu's holding.

Insiders in Innovent Biologics didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Innovent Biologics insiders own 7.0% of the company, currently worth about HK$5.9b based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Innovent Biologics Tell Us?

Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. At Simply Wall St, we found 1 warning sign for Innovent Biologics that deserve your attention before buying any shares.

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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.