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Should You Be Worried About Insider Transactions At Ever Sunshine Lifestyle Services Group Limited (HKG:1995)?

Simply Wall St

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 shareholders might well want to know whether insiders have been buying or selling shares in Ever Sunshine Lifestyle Services Group Limited (HKG:1995).

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, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. 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.'

View our latest analysis for Ever Sunshine Lifestyle Services Group

Ever Sunshine Lifestyle Services Group Insider Transactions Over The Last Year

The Deputy Chairman of the Board, Feng Lin, made the biggest insider sale in the last 12 months. That single transaction was for HK$425m worth of shares at a price of HK$4.32 each. So we know that an insider sold shares at around the present share price of HK$3.82. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. 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. Feng Lin was the only individual insider to sell shares in the last twelve months.

Happily, we note that in the last year insiders paid HK$133m for 30.8m shares. But they sold 98.5m for HK$425m. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

SEHK:1995 Recent Insider Trading, August 16th 2019

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Ever Sunshine Lifestyle Services Group Insiders Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at Ever Sunshine Lifestyle Services Group. In total, Feng Lin sold CN¥425m worth of shares in that time. On the other hand we note insiders bought CN¥133m worth of shares, as previously mentioned. Generally this level of net selling might be considered a bit bearish.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Ever Sunshine Lifestyle Services Group insiders own about HK$838m worth of shares (which is 14% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Ever Sunshine Lifestyle Services Group Tell Us?

The insider sales have outweighed the insider buying, at Ever Sunshine Lifestyle Services Group, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But it is good to see that Ever Sunshine Lifestyle Services Group is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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: Ever Sunshine Lifestyle Services Group 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 editorial-team@simplywallst.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.