It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Ever Sunshine Lifestyle Services Group Limited (HKG:1995).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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 Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Ever Sunshine Lifestyle Services Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Deputy Chairman of the Board, Feng Lin, sold HK$425m worth of shares at a price of HK$4.32 per share. That means that an insider was selling shares at around the current price of HK$3.76. While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern. Feng Lin was the only individual insider to sell shares in the last twelve months.
Over the last year, we can see that insiders have bought 30.8m shares worth HK$133m. But insiders sold 98.5m shares worth HK$425m. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Ever Sunshine Lifestyle Services Group Insiders Are Selling The Stock
We’ve seen more insider selling than insider buying at Ever Sunshine Lifestyle Services Group recently. In that time, Feng Lin dumped CN¥425m worth of shares. On the other hand we note insiders bought CN¥133m worth of shares, as previously mentioned. Generally this level of net selling might be considered a bit bearish.
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Ever Sunshine Lifestyle Services Group insiders own 14% of the company, currently worth about HK$825m based on the recent share price. 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 Ever Sunshine Lifestyle Services Group Tell Us?
The insider sales have outweighed the insider buying, at Ever Sunshine Lifestyle Services Group, in the last three months. Zooming out, the longer term picture doesn’t give us much comfort. But it is good to see that Ever Sunshine Lifestyle Services Group is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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.
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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. Thank you for reading.