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 shareholders might well want to know whether insiders have been buying or selling shares in Beijing Sports and Entertainment Industry Group Limited (HKG:1803).
What Is Insider Selling?
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.
The Last 12 Months Of Insider Transactions At Beijing Sports and Entertainment Industry Group
In the last twelve months, the biggest single purchase by an insider was when Executive Director Ngai Tsui bought HK$16m worth of shares at a price of HK$2.37 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.32). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. 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. Notably Ngai Tsui was also the biggest seller.
Over the last year, we can see that insiders have bought 10000000 shares worth HK$19m. On the other hand they divested 8435000 shares, for HK$2.6m. In total, Beijing Sports and Entertainment Industry Group insiders bought more than they sold over the last year. They paid about HK$1.90 on average. This is nice to see since it implies that insiders might see value around current prices. You can see the insider transactions (by 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!
Beijing Sports and Entertainment Industry Group is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Does Beijing Sports and Entertainment Industry Group Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. From what we can see in our data, insiders own only about HK$935k worth of Beijing Sports and Entertainment Industry Group shares. It's always possible we are missing something but from our data, it looks like insider ownership is minimal.
What Might The Insider Transactions At Beijing Sports and Entertainment Industry Group Tell Us?
It doesn't really mean much that no insider has traded Beijing Sports and Entertainment Industry Group shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Beijing Sports and Entertainment Industry Group stock. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.