It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Wuling Motors Holdings Limited (HKG:305).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.
Wuling Motors Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chairman of the Board Zhijun Yuan for HK$731k worth of shares, at about HK$0.40 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.24). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Zhijun Yuan was the only individual insider to buy shares in the last twelve months.
Zhijun Yuan purchased 3000000 shares over the year. The average price per share was HK$0.40. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Wuling Motors Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Wuling Motors 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From our data, it seems that Wuling Motors Holdings insiders own 14% of the company, worth about HK$70m. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
So What Does This Data Suggest About Wuling Motors Holdings Insiders?
The fact that there have been no Wuling Motors Holdings insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Wuling Motors Holdings and we see no evidence to suggest they are worried about the future. Along with insider transactions, I recommend checking if Wuling Motors Holdings is growing revenue. This free chart of historic revenue and earnings should make that easy.
But note: Wuling Motors Holdings 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.
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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