Read This Before Selling Kronos Bio, Inc. (NASDAQ:KRON) Shares

It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Kronos Bio, Inc. (NASDAQ:KRON), you may well want to know whether insiders have been buying or selling.

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, rules govern insider transactions, and certain disclosures are required.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

View our latest analysis for Kronos Bio

Kronos Bio Insider Transactions Over The Last Year

The President Norbert Bischofberger made the biggest insider purchase in the last 12 months. That single transaction was for US$1.8m worth of shares at a price of US$19.00 each. Even though the purchase was made at a significantly lower price than the recent price (US$31.73), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Kronos Bio insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insiders at Kronos Bio Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Kronos Bio. Not only was there no selling that we can see, but they collectively bought US$3.6m worth of shares. This makes one think the business has some good points.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Kronos Bio insiders own 18% of the company, currently worth about US$322m 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.

What Might The Insider Transactions At Kronos Bio Tell Us?

The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Kronos Bio. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 2 warning signs for Kronos Bio (of which 1 is potentially serious!) you should know about.

But note: Kronos Bio 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, but not derivative transactions.

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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. 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.
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