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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Essex Bio-Technology Limited (HKG:1061), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
Check out our latest analysis for Essex Bio-Technology
The Last 12 Months Of Insider Transactions At Essex Bio-Technology
In the last twelve months, the biggest single purchase by an insider was when Founder & Chairman Mia Je Ngiam bought HK$640k worth of shares at a price of HK$5.08 per share. That implies that an insider found the current price of HK$5.63 per share to be enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. In this case we're pleased to report that the insider bought shares at close to current prices. Mia Je Ngiam was the only individual insider to buy shares in the last twelve months.
Mia Je Ngiam bought a total of 300000 shares over the year at an average price of HK$5.06. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Essex Bio-Technology is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Essex Bio-Technology
For a common shareholder, it is worth checking how many shares are held by company 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. It's great to see that Essex Bio-Technology insiders own 54% of the company, worth about HK$1.7b. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.