We often see insiders buying up shares in companies that perform well over the long term. 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 Road King Infrastructure Limited (HKG:1098).
What Is Insider Selling?
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, most countries require that the company discloses such transactions to the market.
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 Road King Infrastructure
In the last twelve months, the biggest single sale by an insider was when the Independent Non-Executive Director, Sai Yung Lau, sold HK$2.8m worth of shares at a price of HK$15.24 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It’s of some comfort that this sale was conducted at a price well above the current share price, which is HK$11.50. So it may not shed much light on insider confidence at current levels.
Insiders in Road King Infrastructure didn’t buy any shares in the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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).
Road King Infrastructure Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Road King Infrastructure shares. In total, Independent Non-Executive Director Sai Yung Lau sold HK$1.9m 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.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It appears that Road King Infrastructure insiders own 3.3% of the company, worth about HK$284m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Road King Infrastructure Tell Us?
An insider sold Road King Infrastructure shares recently, but they didn’t buy any. And even if we look at the last year, we didn’t see any purchases. On the plus side, Road King Infrastructure makes money, and is growing profits. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. While we like knowing what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To help with this, we’ve discovered 3 warning signs (1 is potentially serious!) that you ought to be aware of before buying any shares in Road King Infrastructure.
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 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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