Did UOL Group Limited (SGX:U14) Insiders Sell Shares?
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 UOL Group Limited (SGX:U14), 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.
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. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
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The Last 12 Months Of Insider Transactions At UOL Group
Executive & Non-Independent Director Lian Kheng Gwee made the biggest insider sale in the last 12 months. That single transaction was for S$770k worth of shares at a price of S$6.43 each. So it’s clear an insider wanted to take some cash off the table, even below the current price of S$6.58. While their view may have changed since they sold, this isn’t a particularly bullish sign. When an insider sells below the current price, it does tend to make us wonder about the current valuation. It is worth noting that this sale was only 12.6% of Lian Kheng Gwee’s holding. Lian Kheng Gwee was the only individual insider to sell over the last year.
Over the last year, we can see that insiders have bought 12.00k shares worth S$77k. On the other hand they divested 120.00k shares, for S$770k. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
UOL Group Insiders Are Selling The Stock
Over the last three months, we’ve seen notably more insider selling, than insider buying, at UOL Group. In total, Lian Kheng Gwee sold S$770k worth of shares in that time. On the other hand we note Non-Executive & Independent Director Tiong Cheng Tan bought S$30k worth of shares. Since the selling really does outweigh the buying, we’d say that these transactions may suggest that some insiders feel the shares are not cheap.
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. Insiders own 1.2% of UOL Group shares, worth about S$60m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At UOL Group Tell Us?
The stark truth for UOL Group is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn’t bring confidence, either. While insiders do own shares, they don’t own a heap, and they have been selling. We’d think twice before buying! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course UOL Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
