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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. 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 Johnson Electric Holdings Limited (HKG:179).
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 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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
See our latest analysis for Johnson Electric Holdings
The Last 12 Months Of Insider Transactions At Johnson Electric Holdings
Honorary Chairman Yik-Chun Koo Wang made the biggest insider purchase in the last 12 months. That single transaction was for HK$165m worth of shares at a price of HK$13.68 each. That means that an insider was happy to buy shares at around the current price of HK$17.04. Of course they may have changed their mind. But this suggests they are optimistic. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. In this case we're pleased to report that the insider purchases were made at close to current prices.
While Johnson Electric Holdings insiders bought shares last year, they didn't sell. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Johnson Electric Holdings Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at Johnson Electric Holdings. Not only was there no selling that we can see, but they collectively bought HK$165m worth of shares. This could be interpreted as suggesting a positive outlook.
Insider Ownership of Johnson Electric Holdings
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Johnson Electric Holdings insiders own 68% of the company, currently worth about HK$11b 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.