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Should You Take Comfort From Insider Transactions At Guangdong Join-Share Financing Guarantee Investment Co., Ltd. (HKG:1543)?

Simply Wall St

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 before you buy or sell Guangdong Join-Share Financing Guarantee Investment Co., Ltd. (HKG:1543), 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, 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 it is perfectly logical to keep tabs on what insiders are doing. 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.

See our latest analysis for Guangdong Join-Share Financing Guarantee Investment

The Last 12 Months Of Insider Transactions At Guangdong Join-Share Financing Guarantee Investment

insider Zhi Jian Wu made the biggest insider purchase in the last 12 months. That single transaction was for HK$8.1m worth of shares at a price of HK$1.58 each. That means that an insider was happy to buy shares at above the current price of HK$1.47. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Zhi Jian Wu was the only individual insider to buy shares in the last twelve months. We note that Zhi Jian Wu was both the biggest buyer and the biggest seller.

Zhi Jian Wu purchased 15.52m shares over the year. The average price per share was HK$1.61. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

SEHK:1543 Recent Insider Trading May 11th 2020

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership of Guangdong Join-Share Financing Guarantee Investment

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Insiders own 18% of Guangdong Join-Share Financing Guarantee Investment shares, worth about HK$405m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Guangdong Join-Share Financing Guarantee Investment Insider Transactions Indicate?

The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Guangdong Join-Share Financing Guarantee Investment. That's what I like to see! 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. You'd be interested to know, that we found 1 warning sign for Guangdong Join-Share Financing Guarantee Investment and we suggest you have a look.

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 editorial-team@simplywallst.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.

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. Thank you for reading.