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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 we'll take a look at whether insiders have been buying or selling shares in Tungtex (Holdings) Company Limited (HKG:518).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. 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.
View our latest analysis for Tungtex (Holdings)
The Last 12 Months Of Insider Transactions At Tungtex (Holdings)
Over the last year, we can see that the biggest insider purchase was by MD of the Group's Retail Operation & Executive Director Chung Man Tung for HK$625k worth of shares, at about HK$0.53 per share. That implies that an insider found the current price of HK$0.54 per share to be enticing. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Tungtex (Holdings) share holders is that an insider was buying at near the current price. The only individual insider to buy over the last year was Chung Man Tung.
Chung Man Tung bought 1.58m shares over the last 12 months at an average price of HK$0.53. 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!
Tungtex (Holdings) is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Tungtex (Holdings) Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Tungtex (Holdings) insiders own about HK$101m worth of shares (which is 41% 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.