We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Mainland Headwear Holdings Limited (HKG:1100).
What Is Insider Buying?
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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’.
The Last 12 Months Of Insider Transactions At Mainland Headwear Holdings
While no particular insider transaction stood out, we can still look at the overall trading.
Po Ling Ngan purchased 1.56m shares over the year. The average price per share was HK$1.11. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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.
Does Mainland Headwear Holdings Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. From our data, it seems that Mainland Headwear Holdings insiders own 9.3% of the company, worth about HK$38m. But they may have an indirect interest through a corporate structure that we haven’t picked up on. Whilst better than nothing, we’re not overly impressed by these holdings.
So What Do The Mainland Headwear Holdings Insider Transactions Indicate?
The fact that there have been no Mainland Headwear Holdings insider transactions recently certainly doesn’t bother us. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Mainland Headwear Holdings and their transactions don’t cause us concern. Along with insider transactions, I recommend checking if Mainland Headwear Holdings is growing revenue. This free chart of historic revenue and earnings should make that easy.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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 firstname.lastname@example.org. 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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