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We often see insiders buying up shares in companies that perform well over the long term. 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 Changmao Biochemical Engineering Company Limited (HKG:954).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia 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’.
Changmao Biochemical Engineering Insider Transactions Over The Last Year
Chairman & Compliance Officer Xin Sheng Rui made the biggest insider purchase in the last 12 months. That single transaction was for HK$656k worth of shares at a price of HK$0.82 each. That implies that an insider found the current (approximate) price enticing. 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 any event it’s generally a positive if insiders are buying shares at around the current price.
Over the last year, we can see that insiders have bought 2.13m shares worth HK$1.6m. In total, Changmao Biochemical Engineering insiders bought more than they sold over the last year. Their average price was about HK$0.75. To my mind it is good that insiders have invested their own money in the company. But we must note that the investments were made at well below today’s share price. The chart below shows insider transactions (by individuals) over the last year. 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 Changmao Biochemical Engineering Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Changmao Biochemical Engineering. In total, insiders bought CN¥1.3m worth of shares in that time, and we didn’t record any sales whatsoever. This could be interpreted as suggesting a positive outlook.
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data indicates that Changmao Biochemical Engineering insiders own about HK$69m worth of shares (which is 14% of the company). However, it’s possible that insiders might have an indirect interest through a more complex structure. Overall, this level of ownership isn’t that impressive, but it’s certainly better than nothing!
So What Does This Data Suggest About Changmao Biochemical Engineering Insiders?
It is good to see recent purchasing. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest Changmao Biochemical Engineering insiders are well aligned, and that they may think the share price is too low. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .
Of course Changmao Biochemical Engineering may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
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. Thank you for reading.