We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Biotron Limited (ASX:BIT).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. 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’.
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Biotron Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Independent & Non-Executive Director Robert Thomas sold AU$818k worth of shares at a price of AU$0.23 per share. That is hardly a positive sign, even though it took place above the latest price (AU$0.11). So it is hard to draw any strong conclusion from it. The only individual insider seller over the last year was Robert Thomas.
Robert Thomas sold a total of 5.34m shares over the year at an average price of AU$0.22. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Biotron better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. From our data, it seems that Biotron insiders own 12% of the company, worth about AU$7.9m. 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 Biotron Insiders?
An insider sold Biotron shares recently, but they didn’t buy any. And even if we look to the last year, we didn’t see any purchases. When you combine this with the relatively low insider ownership, we are very cautious about the stock. As the saying goes, only fools rush in. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
Of course Biotron may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.