Don't Ignore The Insider Selling In OSI Systems

Some OSI Systems, Inc. (NASDAQ:OSIS) shareholders may be a little concerned to see that the Chairman, Deepak Chopra, recently sold a substantial US$2.3m worth of stock at a price of US$153 per share. However, that sale only accounted for 3.4% of their holding, so arguably it doesn't say much about their conviction.

Check out our latest analysis for OSI Systems

The Last 12 Months Of Insider Transactions At OSI Systems

Over the last year, we can see that the biggest insider sale was by the Executive VP & CFO, Alan Edrick, for US$6.3m worth of shares, at about US$144 per share. That means that even when the share price was below the current price of US$153, 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. 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. It is worth noting that this sale was only 13% of Alan Edrick's holding.

In the last year OSI Systems insiders didn't buy any company stock. 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 OSI Systems 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.

Does OSI Systems 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's great to see that OSI Systems insiders own 6.0% of the company, worth about US$153m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About OSI Systems Insiders?

Insiders sold OSI Systems shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. But it is good to see that OSI Systems is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. For example, OSI Systems has 3 warning signs (and 2 which are a bit unpleasant) we think you should know about.

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.