We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Kingdee International Software Group Company Limited (HKG:268), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
Kingdee International Software Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Founder, Shao Xu, sold HK$504m worth of shares at a price of HK$8.40 per share. So what is clear is that an insider saw fit to sell at around the current price of HK$8.30. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
Over the last year we saw more insider selling of Kingdee International Software Group shares, than buying. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Kingdee International Software Group Insiders Are Selling The Stock
Over the last three months, we've seen notably more insider selling, than insider buying, at Kingdee International Software Group. We note Shao Xu cashed in CN¥504m worth of shares. On the other hand we note CFO, Senior VP & Executive Director Bo Lin bought CN¥688k worth of shares, as previously mentioned. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
Insider Ownership of Kingdee International Software Group
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It's great to see that Kingdee International Software Group insiders own 22% of the company, worth about HK$6.1b. 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 Kingdee International Software Group Insiders?
The insider sales have outweighed the insider buying, at Kingdee International Software Group, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. 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.
Of course Kingdee International Software Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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 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. Thank you for reading.