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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Youyuan International Holdings Limited (HKG:2268).

What Is Insider Selling?

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, 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

Check out our latest analysis for Youyuan International Holdings

The Last 12 Months Of Insider Transactions At Youyuan International Holdings

Executive Chairman Wentuo Ke made the biggest insider sale in the last 12 months. That single transaction was for HK$270m worth of shares at a price of HK$3.51 each. That is hardly a positive sign, even though it took place above the latest price (HK$2.73). So it may not shed much light on insider confidence at current levels. Wentuo Ke was the only individual insider to sell shares in the last twelve months.

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!

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

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. Youyuan International Holdings insiders own about HK$1.7b worth of shares (which is 49% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Youyuan International Holdings Tell Us?

The fact that there have been no Youyuan International Holdings insider transactions recently certainly doesn’t bother us. While we feel good about high insider ownership of Youyuan International 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 .