We often see insiders buying up shares in companies that perform well over the long term. 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 before you buy or sell Beijing Chunlizhengda Medical Instruments Co., Ltd. (HKG:1858), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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.
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 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’.
The Last 12 Months Of Insider Transactions At Beijing Chunlizhengda Medical Instruments
In the last twelve months, the biggest single sale by an insider was when the insider, Lai Ming Lam, sold HK$2.2m worth of shares at a price of HK$17.50 per share. That means that even when the share price was below the current price of HK$48.00, an insider wanted to cash in some shares. 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. While insider selling is not a positive sign, we can’t be sure if it does mean insiders think the shares are fully valued, so it’s only a weak sign. We note that the biggest single sale was only 6.0% of Lai Ming Lam’s holding. Lai Ming Lam was the only individual insider to sell over the last year.
You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does Beijing Chunlizhengda Medical Instruments Boast High 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. We usually like to see fairly high levels of insider ownership. It’s great to see that Beijing Chunlizhengda Medical Instruments insiders own 68% of the company, worth about HK$4.6b. 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 Beijing Chunlizhengda Medical Instruments Tell Us?
It doesn’t really mean much that no insider has traded Beijing Chunlizhengda Medical Instruments shares in the last quarter. While we feel good about high insider ownership of Beijing Chunlizhengda Medical Instruments, we can’t say the same about the selling of shares. Of course, the future is what matters most. So if you are interested in Beijing Chunlizhengda Medical Instruments, you should check out this free report on analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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