It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell China Oriental Group Company Limited (HKG:581), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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 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’.
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China Oriental Group Insider Transactions Over The Last Year
Independent Non-Executive Director Man Chung Wong made the biggest insider sale in the last 12 months. That single transaction was for HK$10m worth of shares at a price of HK$6.58 each. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of HK$4.91. So it may not shed much light on insider confidence at current levels. Man Chung Wong was the only individual insider to sell over the last year.
Man Chung Wong divested 3.90m shares over the last 12 months at an average price of CN¥6.48. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
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Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that China Oriental Group insiders own 3.0% of the company, worth about HK$492m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About China Oriental Group Insiders?
It doesn’t really mean much that no insider has traded China Oriental Group shares in the last quarter. It’s great to see high levels of insider ownership, but looking back at the last year, we don’t gain confidence from the China Oriental Group insiders selling. Of course, the future is what matters most. So if you are interested in China Oriental Group, you should check out this free report on analyst forecasts for the company.
Of course China Oriental Group 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 firstname.lastname@example.org.