We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell China Baofeng (International) Limited (HKG:3966), you may well want to know whether insiders have been buying or selling.
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 in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia 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 China Baofeng (International)
The Last 12 Months Of Insider Transactions At China Baofeng (International)
CEO & Executive Director Zidong Dang made the biggest insider purchase in the last 12 months. That single transaction was for HK$10m worth of shares at a price of HK$2.60 each. That means that even when the share price was higher than HK$2.07 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Zidong Dang was the only individual insider to buy over the year.
Zidong Dang bought 7.97m shares over the last 12 months at an average price of HK$2.60. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Does China Baofeng (International) Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. China Baofeng (International) insiders own about HK$961m worth of shares (which is 70% 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.