It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in China Overseas Grand Oceans Group Limited (HKG:81).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. 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 China Overseas Grand Oceans Group

China Overseas Grand Oceans Group Insider Transactions Over The Last Year

Tao Guang Wang made the biggest insider sale in the last 12 months. That single transaction was for HK$7.2m worth of shares at a price of HK$5.10 each. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is HK$2.43. So it may not tell us anything about how insiders feel about the current share price.

Happily, we note that in the last year insiders paid HK$12m for 3.47m shares. On the other hand they divested 90.61m shares, for HK$25m. All up, insiders sold more shares in China Overseas Grand Oceans Group than they bought, over the last year. They sold for an average price of about HK$0.28. It’s not particularly great to see insiders were selling shares around current prices (shares recently traded around HK$2.43). But we don’t put too much weight on the insider selling, since sellers could have personal reasons. You can see the insider transactions over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

I will like China Overseas Grand Oceans Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. China Overseas Grand Oceans Group insiders own about HK$1.4b worth of shares (which is 17% 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.

So What Do The China Overseas Grand Oceans Group Insider Transactions Indicate?

The fact that there have been no China Overseas Grand Oceans Group insider transactions recently certainly doesn’t bother us. 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 Overseas Grand Oceans Group insiders selling. 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.

If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

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 editorial-team@simplywallst.com.