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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Wealthy Way Group Limited (HKG:3848).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. 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.'
View our latest analysis for Wealthy Way Group
The Last 12 Months Of Insider Transactions At Wealthy Way Group
The Founder, Wai Lo, made the biggest insider sale in the last 12 months. That single transaction was for HK$32m worth of shares at a price of HK$6.80 each. That means that an insider was selling shares at below the current price (HK$6.80). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 4.4% of Wai Lo's holding. The only individual insider seller over the last year was Wai Lo.
You can see the insider transactions (by individuals) 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Does Wealthy Way Group 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Wealthy Way Group insiders own 67% of the company, worth about HK$702m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.