Possible Bearish Signals With Swedish Orphan Biovitrum Insiders Disposing Stock

Many Swedish Orphan Biovitrum AB (publ) (STO:SOBI) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

Swedish Orphan Biovitrum Insider Transactions Over The Last Year

The CEO & President, Guido Oelkers, made the biggest insider sale in the last 12 months. That single transaction was for kr59m worth of shares at a price of kr293 each. So what is clear is that an insider saw fit to sell at around the current price of kr273. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign. Notably Guido Oelkers was also the biggest buyer, having purchased kr37m worth of shares.

Over the last year, we can see that insiders have bought 254.61k shares worth kr37m. But they sold 807.67k shares for kr245m. Over the last year we saw more insider selling of Swedish Orphan Biovitrum shares, than buying. You can see the insider transactions (by companies and 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!

View our latest analysis for Swedish Orphan Biovitrum

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Swedish Orphan Biovitrum Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Swedish Orphan Biovitrum. Specifically, insiders ditched kr7.8m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership Of Swedish Orphan Biovitrum

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Swedish Orphan Biovitrum insiders own about kr289m worth of shares. That equates to 0.3% of the company. 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 Swedish Orphan Biovitrum Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since Swedish Orphan Biovitrum is profitable and growing, we're not too worried by this. 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. 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. In terms of investment risks, we've identified 1 warning sign with Swedish Orphan Biovitrum and understanding this should be part of your investment process.

But note: Swedish Orphan Biovitrum 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 currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.