We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Great Water Holdings Limited (HKG:8196), you may well want to know whether insiders have been buying or selling.

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, 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 equally, we would consider it foolish to ignore insider transactions altogether. 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 Great Water Holdings

Great Water Holdings Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by Chen Kuo Yang for HK$15m worth of shares, at about HK$3.69 per share. 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$1.15. So it may not tell us anything about how insiders feel about the current share price. Chen Kuo Yang was the only individual insider to sell shares in the last twelve months.

The chart below shows insider transactions over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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 Great Water Holdings

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Great Water Holdings insiders own 73% of the company, currently worth about HK$253m based on the recent share price. 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 Great Water Holdings Insider Transactions Indicate?

It doesn’t really mean much that no insider has traded Great Water Holdings shares in the last quarter. While we feel good about high insider ownership of Great Water Holdings, we can’t say the same about the selling of shares. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .

Of course Great Water Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.