We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Shenzhen International Holdings Limited (HKG:152).
What Is Insider Selling?
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 don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'
The Last 12 Months Of Insider Transactions At Shenzhen International Holdings
Over the last year, we can see that the biggest insider sale was by the Non-Executive Director, Chu Xie, for HK$4.3m worth of shares, at about HK$13.98 per share. So what is clear is that an insider saw fit to sell at around the current price of HK$13.90. 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.
Happily, we note that in the last year insiders paid HK$6.2m for 439k shares. But insiders sold 511k shares worth HK$7.9m. Over the last year we saw more insider selling of Shenzhen International Holdings shares, than buying. 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!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Shenzhen International Holdings Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at Shenzhen International Holdings. Not only was there no selling that we can see, but they collectively bought HK$1.3m worth of shares. This makes one think the business has some good points.
Does Shenzhen International Holdings 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. From looking at our data, insiders own HK$32m worth of Shenzhen International Holdings stock, about 0.1% of the company. But they may have an indirect interest through a corporate structure that we haven't picked up on. I generally like to see higher levels of ownership.
So What Does This Data Suggest About Shenzhen International Holdings Insiders?
It is good to see recent purchasing. However, the longer term transactions are not so encouraging. The more recent transactions are a positive, but Shenzhen International Holdings insiders haven't shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. In short they are likely aligned with shareholders. Of course, the future is what matters most. So if you are interested in Shenzhen International Holdings, you should check out this free report on analyst forecasts for the company.
But note: Shenzhen International Holdings 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.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.