We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in BioSpecifics Technologies Corp. (NASDAQ:BSTC).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
The Last 12 Months Of Insider Transactions At BioSpecifics Technologies
In the last twelve months, the biggest single sale by an insider was when the insider, Thomas Wegman, sold US$3.3m worth of shares at a price of US$51.89 per share. That means that even when the share price was below the current price of US$56.65, an insider wanted to cash in some shares. 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. While insider selling is not a positive sign, we can’t be sure if it does mean insiders think the shares are fully valued, so it’s only a weak sign. This single sale was just 6% of Thomas Wegman’s stake.
We note that in the last year insiders divested 190k shares for a total of US$9.4m. BioSpecifics Technologies insiders didn’t buy any shares over the last year. You can see the insider transactions (by 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!
BioSpecifics Technologies Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at BioSpecifics Technologies. In total, insiders sold US$2.5m 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.
Does BioSpecifics Technologies Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It appears that BioSpecifics Technologies insiders own 22% of the company, worth about US$90m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At BioSpecifics Technologies Tell Us?
Insiders sold BioSpecifics Technologies shares recently, but they didn’t buy any. Looking to the last twelve months, our data doesn’t show any insider buying. But since BioSpecifics Technologies is profitable and growing, we’re not too worried by this. While insiders do own shares, they don’t own a heap, and they have been selling. We’d think twice before buying! Of course, the future is what matters most. So if you are interested in BioSpecifics Technologies, you should check out this free report on analyst forecasts for the company.
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, but not derivative transactions.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.