We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Country Garden Services Holdings Company Limited (HKG:6098), you may well want to know whether insiders have been buying or selling.
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year’.
Country Garden Services Holdings Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Non-Executive Director, Bijun Wu, sold HK$65m worth of shares at a price of HK$37.02 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of HK$49.60. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don’t know for sure what they think of the stock price. This single sale was just 36% of Bijun Wu’s stake.
Insiders in Country Garden Services Holdings didn’t buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Country Garden Services Holdings Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at Country Garden Services Holdings. In total, Non-Executive Director Bijun Wu dumped HK$65m worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the insiders think that the shares are a bargain.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Country Garden Services Holdings insiders own 53% of the company, worth about HK$73b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At Country Garden Services Holdings Tell Us?
An insider sold stock recently, but they haven’t been buying. And there weren’t any purchases to give us comfort, over the last year. On the plus side, Country Garden Services Holdings makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. For example – Country Garden Services Holdings has 3 warning signs we think you should be aware of.
Of course Country Garden Services Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality 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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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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