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 shareholders might well want to know whether insiders have been buying or selling shares in China Lesso Group Holdings Limited (HKG:2128).
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, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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 China Lesso Group Holdings
Over the last year, we can see that the biggest insider sale was by the VP & Executive Director, Xiaoping Zuo, for HK$658k worth of shares, at about HK$7.31 per share. So we know that an insider sold shares at around the present share price of HK$6.95. While insider selling is a negative, to us, it is more negative if the shares are sold 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. Xiaoping Zuo was the only individual insider to sell over the last year. Notably Xiaoping Zuo was also the biggest buyer, having purchased HK$652k worth of shares.
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!
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).
Have China Lesso Group Holdings Insiders Traded Recently?
We saw insider selling worth CN¥658k in the last three months. That's only a tiny bit more than the purchases, worth CN¥652k. The net selling is so small that it's hard to draw any conclusions from these recent transactions.
Insider Ownership of China Lesso Group Holdings
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that China Lesso Group Holdings insiders own 69% of the company, worth about HK$14b. 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 Does This Data Suggest About China Lesso Group Holdings Insiders?
Insider sales and purchases have netted out over the last three months, so it's hard to draw any conclusion from recent trading. While we gain confidence from high insider ownership of China Lesso Group Holdings, we can't say the same about their transactions in the last year, in the absence of further purchases. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: China Lesso 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.
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.