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 we’ll take a look at whether insiders have been buying or selling shares in Yangzhou Guangling District Taihe Rural Micro-finance Company Limited (HKG:8252).
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.
We don’t think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Colombia 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’.
See our latest analysis for Yangzhou Guangling District Taihe Rural Micro-finance
Yangzhou Guangling District Taihe Rural Micro-finance Insider Transactions Over The Last Year
Cho Hung Suen made the biggest insider sale in the last 12 months. That single transaction was for HK$14m worth of shares at a price of HK$2.25 each. That means that an insider was selling shares at around the current price of HK$2.14. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment. Cho Hung Suen was the only individual insider to sell over the last year.
Cho Hung Suen divested 19.51m shares over the last 12 months at an average price of CN¥2.25. 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!
I will like Yangzhou Guangling District Taihe Rural Micro-finance better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Yangzhou Guangling District Taihe Rural Micro-finance Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. Yangzhou Guangling District Taihe Rural Micro-finance insiders own 8.7% of the company, currently worth about HK$111m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.