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We often see insiders buying up shares in companies that perform well over the long term. 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 Sino Hotels (Holdings) Limited (HKG:1221).
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 on the market. 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. 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'.
Check out our latest analysis for Sino Hotels (Holdings)
The Last 12 Months Of Insider Transactions At Sino Hotels (Holdings)
Executive Chairman Chee Siong Ng made the biggest insider purchase in the last 12 months. That single transaction was for HK$2.2m worth of shares at a price of HK$3.45 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$3.38). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Chee Siong Ng was the only individual insider to buy shares in the last twelve months.
Chee Siong Ng purchased 648k shares over the year. The average price per share was HK$3.44. 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!
Sino Hotels (Holdings) is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership of Sino Hotels (Holdings)
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Our data isn't picking up on much insider ownership at Sino Hotels (Holdings), though insiders do hold about HK$5.1m worth of shares. However, it's possible that insiders might have an indirect interest through a more complex structure. We might be missing something but that seems like very low insider ownership.