It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Coastal Greenland Limited (HKG:1124).
Do Insider Transactions Matter?
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia 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'.
Coastal Greenland Insider Transactions Over The Last Year
While no particular insider transaction stood out, we can still look at the overall trading.
Xianglong Xia purchased 2.50m shares over the year. The average price per share was HK$0.25. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Coastal Greenland is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Coastal Greenland 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data isn't picking up on much insider ownership at Coastal Greenland, though insiders do hold about HK$899k worth of shares. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It's always possible we are missing something but from our data, it looks like insider ownership is minimal.
So What Do The Coastal Greenland Insider Transactions Indicate?
The fact that there have been no Coastal Greenland insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Coastal Greenland insiders are doubting the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Be aware that Coastal Greenland is showing 2 warning signs in our investment analysis, and 1 of those makes us a bit uncomfortable...
But note: Coastal Greenland 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 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.
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