The PolyNovo Ltd (ASX: PNV) share price has been having a tough week.
In morning trade, the medical device company's shares were down as much as 6% to $1.71.
When the PolyNovo share price hit that level, it was down over 17% in the space of two days.
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Why is the PolyNovo share price under pressure?
Investors have been hitting the sell button this week amid some major insider selling.
According to a change of director's interest notice, the company's chairman, David Williams, sold a large number of PolyNovo shares between 17 March to 22 March.
Williams sold a total of 4.75 million shares across this period for a total consideration of approximately $9.7 million. This equates to an average sale price of $2.04 per share.
Should you be concerned?
Insider selling rarely goes down well with the market. That's because it is often regarded as a bearish indicator.
After all, if you were so confident that the PolyNovo share price was good value and destined to head higher, you wouldn't be a seller.
But it is worth remembering that directors do have a life outside their company. And that is what has driven the sale of these shares.
PolyNovo explained that Williams needed the funds to support a US property purchase. It advised:
Chairman Mr David Williams has sold 4.75m shares, the proceeds of which will part settle a US property purchase.
The company also highlights that Williams still has a considerable holding following this sale and has no plans to offload any other shares in the near future. It adds:
Mr Williams still holds 21,384,432 fully paid ordinary shares and does not intend to sell more shares for the foreseeable future.
All in all, this appears to demonstrate that Williams' interests remain firmly aligned with shareholders, making this selloff probably a bit of an overreaction.
