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 we’ll take a look at whether insiders have been buying or selling shares in YY Inc. (NASDAQ:YY).
Do Insider Transactions Matter?
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 equally, we would consider it foolish to ignore insider transactions altogether. 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 YY
Jun Lei made the biggest insider sale in the last 12 months. That single transaction was for US$71m worth of shares at a price of US$142 each. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is US$67.48. So it may not tell us anything about how insiders feel about the current share price. Jun Lei was the only individual insider to sell over the last year.
You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does YY Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. YY insiders own about US$968m worth of shares (which is 24% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About YY Insiders?
It doesn’t really mean much that no insider has traded YY shares in the last quarter. It’s great to see high levels of insider ownership, but looking back at the last year, we don’t gain confidence from the YY insiders selling. Of course, the future is what matters most. So if you are interested in YY, you should check out this free report on analyst forecasts for the company.
But note: YY 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 firstname.lastname@example.org.