Insiders Could Have Profited By Holding onto BrainAurora Medical Technology Shares Despite 28% Drop

BrainAurora Medical Technology Limited's (HKG:6681) stock price has dropped 28% in the previous week, but insiders who sold CN¥639m in stock over the past year have had less luck. The average selling price of CN¥4.92 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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BrainAurora Medical Technology Insider Transactions Over The Last Year

In fact, the recent purchase by Chief Strategy Officer & Chairman Zheng Tan was not their only acquisition of BrainAurora Medical Technology shares this year. They previously made an even bigger purchase of HK$515m worth of shares at a price of HK$5.60 per share. That means that an insider was happy to buy shares at above the current price of HK$2.94. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Zheng Tan was the only individual insider to buy during the last year. We note that Zheng Tan was also the biggest seller.

All up, insiders sold more shares in BrainAurora Medical Technology than they bought, over the last year. 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!

See our latest analysis for BrainAurora Medical Technology

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BrainAurora Medical Technology Insiders Are Selling The Stock

There was substantially more insider selling, than buying, of BrainAurora Medical Technology shares over the last three months. In total, insider Xiaoyi Wang sold HK$117m worth of shares in that time. Meanwhile Chief Strategy Officer & Chairman Zheng Tan bought HK$18m worth. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. BrainAurora Medical Technology insiders own 44% of the company, currently worth about HK$1.8b based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At BrainAurora Medical Technology Tell Us?

Unfortunately, there has been more insider selling of BrainAurora Medical Technology stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. You'd be interested to know, that we found 2 warning signs for BrainAurora Medical Technology and we suggest you have a look.

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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.