Insiders Who Sold HK$69m Of Biosysen Made The Right Call
While Biosysen Limited (HKG:1355) shareholders have had a good week with the stock up 28%, they shouldn't let their guards down. Although prices were relatively low, insiders chose to sell HK$69m worth of stock in the past 12 months. This could be a sign of impending weakness.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Biosysen Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the insider, Fuer Yuan, sold HK$38m worth of shares at a price of HK$0.11 per share. That means that an insider was selling shares at slightly below the current price (HK$0.18). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was 64% of Fuer Yuan's holding.
In the last twelve months insiders purchased 130.94m shares for HK$9.9m. But they sold 597.13m shares for HK$69m. Over the last year we saw more insider selling of Biosysen shares, than buying. They sold for an average price of about HK$0.12. We don't gain confidence from insider selling below the recent share price. Of course, the sales could be motivated for a multitude of reasons, so we shouldn't jump to conclusions. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Check out our latest analysis for Biosysen
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).
Insider Ownership Of Biosysen
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data indicates that Biosysen insiders own about HK$29m worth of shares (which is 13% of the company). However, it's possible that insiders might have an indirect interest through a more complex structure. We do generally prefer see higher levels of insider ownership.
So What Does This Data Suggest About Biosysen Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. Still, the insider transactions at Biosysen in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Biosysen. For instance, we've identified 5 warning signs for Biosysen (2 are a bit unpleasant) you should be aware of.
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.