Stock Analysis

Multiple insiders bought HSBC Holdings plc (LON:HSBA) stock earlier this year, a positive sign for shareholders

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LSE:HSBA
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Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of HSBC Holdings plc (LON:HSBA), it sends a favourable message to the company's shareholders.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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HSBC Holdings Insider Transactions Over The Last Year

The insider Xiao Ying Duan made the biggest insider purchase in the last 12 months. That single transaction was for UK£76k worth of shares at a price of UK£5.10 each. That means that even when the share price was higher than UK£4.99 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

In the last twelve months HSBC Holdings insiders were buying shares, but not selling. They paid about UK£3.86 on average. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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LSE:HSBA Insider Trading Volume December 5th 2022

HSBC Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Does HSBC Holdings Boast High Insider Ownership?

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. I reckon it's a good sign if insiders own a significant number of shares in the company. HSBC Holdings insiders own about UK£42m worth of shares. That equates to 0.04% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The HSBC Holdings Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in HSBC Holdings and their transactions don't cause us concern. 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 assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of HSBC Holdings.

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.

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