Some Fountain Set (Holdings) Limited (HKG:420) shareholders may be a little concerned to see that the Founder & Honorary Chairman, Chung Ha, recently sold a whopping HK$130m worth of stock at a price of HK$1.49 per share. That's a big dump, and it decreased their holding size by 44%, which is notable but not too bad.
The Last 12 Months Of Insider Transactions At Fountain Set (Holdings)
Notably, that recent sale by Chung Ha is the biggest insider sale of Fountain Set (Holdings) shares that we've seen in the last year. That means that an insider was selling shares at around the current price of HK$1.35. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.
Over the last year, we can see that insiders have bought 40810000 shares worth HK$48m. But they sold 149184367 for HK$215m. Chung Ha divested 149184367 shares over the last 12 months at an average price of HK$1.44. 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!
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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 13% of Fountain Set (Holdings) shares, worth about HK$216m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Fountain Set (Holdings) Tell Us?
The stark truth for Fountain Set (Holdings) is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But since Fountain Set (Holdings) is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. Along with insider transactions, I recommend checking if Fountain Set (Holdings) is growing revenue. This free chart of historic revenue and earnings should make that easy.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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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