Insiders might want to re-evaluate their US$2.4m stock purchase as Kronos Bio, Inc. (NASDAQ:KRON) drops to US$145m
The recent price decline of 11% in Kronos Bio, Inc.'s (NASDAQ:KRON) stock may have disappointed insiders who bought US$2.4m worth of shares at an average price of US$3.98 in the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$1.6m.
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.
See our latest analysis for Kronos Bio
The Last 12 Months Of Insider Transactions At Kronos Bio
Over the last year, we can see that the biggest insider purchase was by President Norbert Bischofberger for US$2.3m worth of shares, at about US$3.83 per share. That means that even when the share price was higher than US$2.56 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months insiders purchased 612.64k shares for US$2.4m. On the other hand they divested 27.79k shares, for US$344k. In the last twelve months there was more buying than selling by Kronos Bio insiders. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Kronos Bio 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 Kronos Bio
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. Insiders own 17% of Kronos Bio shares, worth about US$25m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Kronos Bio Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Kronos Bio and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Kronos Bio. Every company has risks, and we've spotted 3 warning signs for Kronos Bio (of which 2 don't sit too well with us!) you should know about.
But note: Kronos Bio may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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, but not derivative transactions.
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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.
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