It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Allied Properties (H.K.) Limited (HKG:56).
What Is Insider Buying?
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.
The Last 12 Months Of Insider Transactions At Allied Properties (H.K.)
In the last twelve months, the biggest single purchase by an insider was when insider Sok Un Chong bought HK$132m worth of shares at a price of HK$1.65 per share. That means that an insider was happy to buy shares at around the current price of HK$1.68. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the Allied Properties (H.K.) insider decided to buy shares at close to current prices. Sok Un Chong was the only individual insider to buy shares in the last twelve months.
Sok Un Chong purchased 92380000 shares over the year. The average price per share was HK$1.65. You can see a visual depiction of insider transactions (by individuals) 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!
Allied Properties (H.K.) is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Allied Properties (H.K.) Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company 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. It appears that Allied Properties (H.K.) insiders own 6.1% of the company, worth about HK$699m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Allied Properties (H.K.) Tell Us?
It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Allied Properties (H.K.) insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! Along with insider transactions, I recommend checking if Allied Properties (H.K.) is growing revenue. This free chart of historic revenue and earnings should make that easy.
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.
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