We often see insiders buying up shares in companies that perform well over the long term. 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 shareholders might well want to know whether insiders have been buying or selling shares in Wai Hung Group Holdings Limited (HKG:3321).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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 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.
Wai Hung Group Holdings Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when insider Lap Leong bought HK$4.7m worth of shares at a price of HK$1.38 per share. That means that an insider was happy to buy shares at above the current price of HK$0.89. 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. In our view, the price an insider pays for shares is very important. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Lap Leong was the only individual insider to buy over the year. Notably Lap Leong was also the biggest seller.
Lap Leong bought 4745000 shares over the last 12 months at an average price of HK$1.38. 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!
Wai Hung Group Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Wai Hung Group 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. Wai Hung Group Holdings insiders own about HK$337m worth of shares (which is 76% 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 Wai Hung Group Holdings Insiders?
It doesn't really mean much that no insider has traded Wai Hung Group Holdings shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Wai Hung Group Holdings insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.
But note: Wai Hung Group 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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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.
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