The recent 12% drop in Cryosite Limited's (ASX:CTE) stock could come as a blow to insiders who purchased AU$1.06m worth of stock at an average buy price of AU$0.69 over the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth AU$874.9k which is not ideal.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
View our latest analysis for Cryosite
Cryosite Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when insider Mark Kerr bought AU$582k worth of shares at a price of AU$0.68 per share. That means that an insider was happy to buy shares at above the current price of AU$0.57. It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was Mark Kerr.
Mark Kerr bought 1.53m shares over the last 12 months at an average price of AU$0.69. 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 always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insider Ownership
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. Cryosite insiders own 56% of the company, currently worth about AU$16m 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.
So What Does This Data Suggest About Cryosite Insiders?
It doesn't really mean much that no insider has traded Cryosite shares in the last quarter. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, Cryosite insiders feel good about the company's future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Cryosite. For example, Cryosite has 2 warning signs (and 1 which is potentially serious) we think you should know about.