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Should You Take Comfort From Insider Transactions At Pacific Millennium Packaging Group Corporation (HKG:1820)?

Simply Wall St

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Pacific Millennium Packaging Group Corporation (HKG:1820).

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.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.

View our latest analysis for Pacific Millennium Packaging Group

The Last 12 Months Of Insider Transactions At Pacific Millennium Packaging Group

Over the last year, we can see that the biggest insider purchase was by Non-Executive Director Philip Tan for HK$5.6m worth of shares, at about HK$4.50 per share. That means that an insider was happy to buy shares at around the current price of HK$4.59. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for Pacific Millennium Packaging Group share holders is that an insider was buying at near the current price. The only individual insider to buy over the last year was Philip Tan.

The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

SEHK:1820 Recent Insider Trading May 4th 2020

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.

Insider Ownership of Pacific Millennium Packaging Group

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our information indicates that Pacific Millennium Packaging Group insiders own about HK$5.7m worth of shares. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. We might be missing something but that seems like very low insider ownership.

What Might The Insider Transactions At Pacific Millennium Packaging Group Tell Us?

It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Pacific Millennium Packaging Group insiders are reasonably well aligned, and optimistic for the future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we found 3 warning signs for Pacific Millennium Packaging Group that deserve your attention before buying any shares.

Of course Pacific Millennium Packaging Group may not be the best stock to buy. So you may wish to see this free collection of high quality 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.