Insider Sells China Automotive Systems Shares
China Automotive Systems Inc (NASDAQ:CAAS) was trading 1.4% lower from the previous closing price. A Form 4 filing filed with the SEC on Tuesday, December 8 showed that Li Jie sold 10,000 shares at an average price of $9.00. The transaction moved the executive's stake in China Automotive Systems Inc. to 91,030 shares.
Why Insider Transactions Are Important?
While transactions from an insider shouldn't be used as the sole item to make an investment or trading decision, an insider buying or selling stock in their company can be a good added factor that leads to more conviction in a decision.
When an insider buys stock after an important sell off, that can indicate the insider's faith in the success of the organization. Henceforth, if the stock is bought at new highs, it might be because the insider feels that the stock is not overvalued. Conversely, insiders who are selling stock at new lows can potentially indicate some kind of capitulation moment. Insiders selling at new highs can indicate that exec wants to "take some profit" and "lock in a gain."
Important Transaction Codes
Investors prefer focusing on transactions which take place in the open market, indicated in the Form 4 with codes P for purchase and S for sale. An open-market transaction means the insider went into the market of their own volition and made an active decision about the potential path for a company and its stock moving forward.
Transaction codes other than P or S are often viewed with less conviction as they are often not tied to a decision by the exec. As an example, transaction code C indicates the conversion of an option. Transaction code A indicates the insider may have been forced to sell shares in order to receive compensation the exec was promised upon being hired by a company.
See more from Benzinga
12 Consumer Cyclical Stocks Moving In Monday's Pre-Market Session
12 Consumer Cyclical Stocks Moving In Friday's After-Market Session
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
