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 before you buy or sell Wonderful Sky Financial Group Holdings Limited (HKG:1260), you may well want to know whether insiders have been buying or selling.
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, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
Wonderful Sky Financial Group Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Founder Tian Ni Liu for HK$3.3m worth of shares, at about HK$0.38 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of HK$0.60. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Tian Ni Liu purchased 8.98m shares over the year. The average price per share was HK$0.38. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Does Wonderful Sky Financial Group Holdings Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Wonderful Sky Financial Group Holdings insiders own 71% of the company, currently worth about HK$489m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Wonderful Sky Financial Group Holdings Insiders?
The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. When combined with notable insider ownership, these factors suggest Wonderful Sky Financial Group Holdings insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To that end, you should learn about the 4 warning signs we've spotted with Wonderful Sky Financial Group Holdings (including 1 which is a bit unpleasant).
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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