Insider Sellers Might Regret Selling Sirnaomics Shares at a Lower Price Than Current Market Value

Sirnaomics Ltd.'s (HKG:2257) stock price has dropped 15% in the previous week, but insiders who sold US$80m in stock over the past year have had less luck. Insiders might have been better off holding onto their shares, given that the average selling price of US$10.12 is still below the current share price.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Sirnaomics

The Last 12 Months Of Insider Transactions At Sirnaomics

The Chief Executive Officer & Executive Director Hung Fai Poon made the biggest insider purchase in the last 12 months. That single transaction was for HK$59m worth of shares at a price of HK$3.36 each. That means that even when the share price was higher than HK$2.59 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

Over the last year, we can see that insiders have bought 17.79m shares worth HK$63m. On the other hand they divested 7.88m shares, for HK$80m. In total, Sirnaomics insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like Sirnaomics better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Sirnaomics Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Sirnaomics. Chief Executive Officer & Executive Director Hung Fai Poon spent HK$59m on stock, and there wasn't any selling. This is a positive in our book as it implies some confidence.

Insider Ownership Of Sirnaomics

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Sirnaomics insiders own about HK$77m worth of shares. That equates to 34% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Sirnaomics Insider Transactions Indicate?

It's certainly positive to see the recent insider purchase. However, the longer term transactions are not so encouraging. The more recent transactions are a positive, but Sirnaomics insiders haven't shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. So they seem pretty well aligned, overall. 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 5 warning signs for Sirnaomics you should be aware of, and 2 of these are a bit concerning.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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 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.