It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell KWG Group Holdings Limited (HKG:1813), you may well want to know whether insiders have been buying or selling.
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Colombia 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’.
KWG Group Holdings Insider Transactions Over The Last Year
Chairman of the Board Jian Min Kong made the biggest insider purchase in the last 12 months. That single transaction was for HK$34m worth of shares at a price of HK$8.41 each. That means that an insider was happy to buy shares at above the current price. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. That purchase may suggest an expectation of positive returns over the long term.
In the last twelve months insiders paid HK$353m for 39.10m shares purchased. In the last twelve months there was more buying than selling by KWG Group Holdings insiders. They paid about HK$9.02 on average. I’d consider this a positive as it suggests insiders see value at around the current price, which is HK$6.54. You can see a visual depiction of insider transactions over the last 12 months, 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).
Insiders at KWG Group Holdings Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at KWG Group Holdings. We can see that Jian Min Kong paid CN¥68m for shares in the company. No-one sold. This makes one think the business has some good points.
Insider Ownership of KWG Group Holdings
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. KWG Group Holdings insiders own about HK$1.9b worth of shares (which is 9.3% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About KWG Group Holdings Insiders?
The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. When combined with notable insider ownership, these factors suggest KWG Group Holdings insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! Of course, the future is what matters most. So if you are interested in KWG Group Holdings, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity 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.