Luyuan Group Holding (Cayman) Insiders Make Handsome Sum Selling Stock At CN¥8.00 Per Share

Despite a 13% gain in Luyuan Group Holding (Cayman) Limited's (HKG:2451) stock price this week, shareholders shouldn't let up. In spite of the relatively cheap prices, insiders made the decision to sell CN¥1.6m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At Luyuan Group Holding (Cayman)

The CFO & Executive Director, Guosheng Chen, made the biggest insider sale in the last 12 months. That single transaction was for HK$1.4m worth of shares at a price of HK$8.00 each. That means that an insider was selling shares at slightly below the current price (HK$11.20). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was 100% of Guosheng Chen's stake. The only individual insider seller over the last year was Guosheng Chen.

Guosheng Chen sold a total of 194.50k shares over the year at an average price of CN¥8.00. 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!

See our latest analysis for Luyuan Group Holding (Cayman)

I will like Luyuan Group Holding (Cayman) better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Luyuan Group Holding (Cayman) Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Luyuan Group Holding (Cayman). In total, CFO & Executive Director Guosheng Chen sold HK$1.6m 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.

Does Luyuan Group Holding (Cayman) Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Luyuan Group Holding (Cayman) insiders own 64% of the company, currently worth about HK$2.9b based on the recent share price. 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 Luyuan Group Holding (Cayman) Insiders?

An insider sold Luyuan Group Holding (Cayman) shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. But it is good to see that Luyuan Group Holding (Cayman) is growing earnings. 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. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Luyuan Group Holding (Cayman). You'd be interested to know, that we found 1 warning sign for Luyuan Group Holding (Cayman) and we suggest you have a look.

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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.