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 Top Education Group Ltd (HKG:1752).
Do Insider Transactions Matter?
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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.
The Last 12 Months Of Insider Transactions At Top Education Group
While there weren’t any large insider transactions in the last twelve months, it’s still worth looking at the trading.
Steven Schwartz sold a total of 800000 shares over the year at an average price of AU$0.28. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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).
Top Education Group Insiders Are Selling The Stock
We have seen a bit of insider selling at Top Education Group, over the last three months. Independent Non-Executive Director Steven Schwartz divested only HK$225k worth of shares in that time. It’s not great to see insider selling, nor the lack of recent buyers. But the volume sold is so low that it really doesn’t bother us.
Insider Ownership of Top Education Group
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Top Education Group insiders own 30% of the company, worth about HK$183m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Top Education Group Insiders?
An insider sold Top Education Group shares recently, but they didn’t buy any. And there weren’t any purchases to give us comfort, over the last year. On the plus side, Top Education Group makes money, and is growing profits. The company boasts high insider ownership, but we’re a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Top Education Group. To help with this, we’ve discovered 5 warning signs (2 are potentially serious!) that you ought to be aware of before buying any shares in Top Education Group.
Of course Top Education Group 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.
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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