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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 Crocodile Garments Limited (HKG:122), 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.
Insider transactions are not the most important thing when it comes to long-term investing. 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’.
Crocodile Garments Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chairman & CEO Kin Ming Lam for HK$523k worth of shares, at about HK$0.67 per share. That implies that an insider found the current (approximate) price enticing. Of course they may have changed their mind. But this suggests they are optimistic. Nonetheless, we consider it positive if insiders want to buy at around the current share price. The only individual insider to buy over the last year was Kin Ming Lam.
Kin Ming Lam bought 7.51m shares over the last 12 months at an average price of HK$0.75. 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!
Crocodile Garments is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Crocodile Garments Have Bought Stock Recently
We saw some Crocodile Garments insider buying shares in the last three months. Kin Ming Lam bought HK$676k worth in that time. On the other hand, Wai Shan Lam sold HK$420k worth of shares. It is nice to see that insiders have bought, but the quantum isn’t large enough to get us excited.
Insider Ownership of Crocodile Garments
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. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that Crocodile Garments insiders own 52% of the company, worth about HK$410m. 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 Do The Crocodile Garments Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Crocodile Garments. Nice! Along with insider transactions, I recommend checking if Crocodile Garments is growing revenue. This free chart of historic revenue and earnings should make that easy.
But note: Crocodile Garments 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.
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 email@example.com.