Should You Take Comfort From Insider Transactions At Fosun International Limited (HKG:656)?
We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Fosun International Limited (HKG:656), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 Colombia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
See our latest analysis for Fosun International
Fosun International Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Independent Non-Executive Director ShengMan Zhang for HK$4.5m worth of shares, at about HK$18.06 per share. That is hardly a positive sign, even though it took place above the latest price (HK$11.90). So it may not tell us anything about how insiders feel about the current share price. ShengMan Zhang was the only individual insider to sell shares in the last twelve months.
Happily, we note that in the last year insiders paid HK$4.6m for 400.00k shares. But insiders sold 250.00k shares worth HK$4.5m. In total, Fosun International insiders bought more than they sold over the last year. The average buy price was around HK$11.39. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price of HK$11.90. You can see a visual depiction of insider transactions over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Fosun International Have Bought Stock Recently
Over the last quarter, Fosun International insiders have spent a meaningful amount on shares. In total, insiders bought CN¥4.6m worth of shares in that time, and we didn’t record any sales whatsoever. This makes one think the business has some good points.
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. Fosun International insiders own about HK$152m worth of shares (which is 0.1% of the company). 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 Fosun International Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Fosun International. Looks promising! Of course, the future is what matters most. So if you are interested in Fosun International, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity 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.
