How Much Are OSI Systems, Inc. (NASDAQ:OSIS) Insiders Taking Off The Table?

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in OSI Systems, Inc. (NASDAQ:OSIS).

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, rules govern insider transactions, and certain disclosures are required.

We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’

View our latest analysis for OSI Systems

OSI Systems Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when Chairman Deepak Chopra sold US$1.9m worth of shares at a price of US$74.90 per share. So we know that an insider sold shares at around the present share price of US$74.46. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.

Happily, we note that in the last year insiders paid US$1.2m for 20.25k shares. But insiders sold 48.25k shares worth US$3.6m. In total, OSI Systems insiders sold more than they bought over the last year. They sold for an average price of about US$74.14. We don’t gain confidence from insider selling below the recent share price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see the insider transactions over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

I will like OSI Systems better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insiders at OSI Systems Have Sold Stock Recently

Over the last three months, we’ve seen significant insider selling at OSI Systems. In total, insiders dumped US$633k worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Does OSI Systems Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. OSI Systems insiders own 7.4% of the company, currently worth about US$100m 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.

So What Do The OSI Systems Insider Transactions Indicate?

Insiders sold stock recently, but they haven’t been buying. Zooming out, the longer term picture doesn’t give us much comfort. Insiders own shares, but we’re still pretty cautious, given the history of sales. We’d think twice before buying! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

But note: OSI Systems 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.

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 editorial-team@simplywallst.com.