We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Guorui Properties Limited (HKG:2329), you may well want to know whether insiders have been buying or selling.
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, rules govern insider transactions, and certain disclosures are required.
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 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'.
Guorui Properties Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Chairman & President, Zhangsun Zhang, for HK$1.0b worth of shares, at about HK$2.38 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of HK$1.63. So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was Zhangsun Zhang. Notably Zhangsun Zhang was also the biggest buyer, having purchased HK$167m worth of shares.
You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Guorui Properties Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at Guorui Properties. Specifically, Zhangsun Zhang bought CN¥151m worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.
Does Guorui Properties Boast High Insider Ownership?
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. It's great to see that Guorui Properties insiders own 83% of the company, worth about HK$6.0b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Guorui Properties Insiders?
It is good to see the recent insider purchase. However, the longer term transactions are not so encouraging. The high levels of insider ownership, and the recent buying by an insider, suggests they are well aligned and optimistic. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
But note: Guorui Properties may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.