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 shareholders might well want to know whether insiders have been buying or selling shares in Xiezhong International Holdings Limited (HKG:3663).
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, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
See our latest analysis for Xiezhong International Holdings
The Last 12 Months Of Insider Transactions At Xiezhong International Holdings
Over the last year, we can see that the biggest insider purchase was by insider Weihong Cheng for HK$31m worth of shares, at about HK$1.53 per share. So it's clear an insider wanted to buy, at around the current price, which is HK$1.71. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider bought shares at close to current prices. The only individual insider to buy over the last year was Weihong Cheng. We note that Weihong Cheng was both the biggest buyer and the biggest seller.
Weihong Cheng bought a total of 26700000 shares over the year at an average price of HK$1.49. 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!
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).
Insider Ownership of Xiezhong International Holdings
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Xiezhong International Holdings insiders own about HK$651m worth of shares (which is 48% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.