Selling US$1.6m Of Paysign Stock Rewarded Insiders

Despite a 15% gain in Paysign, Inc.'s (NASDAQ:PAYS) stock price this week, shareholders shouldn't let up. The fact that insiders chose to dispose of US$1.6m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

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.

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The Last 12 Months Of Insider Transactions At Paysign

The insider, Daniel Spence, made the biggest insider sale in the last 12 months. That single transaction was for US$376k worth of shares at a price of US$3.76 each. That means that even when the share price was below the current price of US$8.26, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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. It is worth noting that this sale was only 2.3% of Daniel Spence's holding.

All up, insiders sold more shares in Paysign than they bought, over the last year. They sold for an average price of about US$4.08. It's not too encouraging to see that insiders have sold at below the current price. Since insiders sell for many reasons, we wouldn't put too much weight on it. 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!

See our latest analysis for Paysign

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Insiders At Paysign Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Paysign. We can see that Independent Director Daniel Henry paid US$118k for shares in the company. No-one sold. This could be interpreted as suggesting a positive outlook.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Paysign insiders own 36% of the company, currently worth about US$159m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Paysign Insiders?

It is good to see the recent insider purchase. On the other hand the transaction history, over the last year, isn't so positive. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Paysign insiders are reasonably well aligned, and optimistic for the future. 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. Our analysis shows 2 warning signs for Paysign (1 shouldn't be ignored!) and we strongly recommend you look at them before investing.

But note: Paysign 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.

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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.