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Read This Before Selling K. Wah International Holdings Limited (HKG:173) Shares

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 shareholders might well want to know whether insiders have been buying or selling shares in K. Wah International Holdings Limited (HKG:173).

What Is Insider Selling?

It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

See our latest analysis for K. Wah International Holdings

K. Wah International Holdings Insider Transactions Over The Last Year

Chairman Che-Woo Lui made the biggest insider purchase in the last 12 months. That single transaction was for HK$13m worth of shares at a price of HK$3.30 each. That implies that an insider found the current (approximate) price enticing. Of course they may have changed their mind. But this suggests they are optimistic. In any event it’s generally a positive if insiders are buying shares at around the current price.

Over the last year, we can see that insiders have bought 24.23m shares worth HK$82m. Overall, K. Wah International Holdings insiders were net buyers last year. Their average price was about HK$3.37. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (HK$3.79). You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

SEHK:173 Insider Trading January 8th 19
SEHK:173 Insider Trading January 8th 19

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

K. Wah International Holdings Insiders Bought Stock Recently

Over the last quarter, K. Wah International Holdings insiders have spent a meaningful amount on shares. Overall, 2 insiders shelled out HK$82m for shares in the company — and none sold. This could be interpreted as suggesting a positive outlook.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. K. Wah International Holdings insiders own about HK$6.2b worth of shares (which is 53% 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.

What Might The Insider Transactions At K. Wah International Holdings Tell Us?

It is good to see recent purchasing. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest K. Wah International Holdings insiders are well aligned, and quite possibly think the share price is too low. Nice! Of course, the future is what matters most. So if you are interested in K. Wah International Holdings, you should check out this free report on analyst forecasts for the company.

Of course K. Wah International Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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 editorial-team@simplywallst.com.

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