It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Dragon Rise Group Holdings Limited (HKG:6829).
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 don’t think shareholders should simply follow insider transactions. 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.
The Last 12 Months Of Insider Transactions At Dragon Rise Group Holdings
In the last twelve months, the biggest single sale by an insider was when the Founder, Yuk-Kit Yip, sold HK$1.1m worth of shares at a price of HK$0.35 per share. While we don’t usually like to see insider selling, it’s more concerning if the sales take place 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$0.20. So it may not tell us anything about how insiders feel about the current share price. Yuk-Kit Yip was the only individual insider to sell over the last year.
Yuk-Kit Yip ditched 10000000 shares over the year. The average price per share was HK$0.36. 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 are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Does Dragon Rise Group 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. Dragon Rise Group Holdings insiders own about HK$172m worth of shares (which is 74% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Dragon Rise Group Holdings Insiders?
It doesn’t really mean much that no insider has traded Dragon Rise Group Holdings shares in the last quarter. It’s great to see high levels of insider ownership, but looking back at the last year, we don’t gain confidence from the Dragon Rise Group Holdings insiders selling. Along with insider transactions, I recommend checking if Dragon Rise Group Holdings is growing revenue. This free chart of historic revenue and earnings should make that easy.
But note: Dragon Rise Group Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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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