We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Hebei Construction Group Corporation Limited (HKG:1727).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Colombia 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 Hebei Construction Group
In the last twelve months, the biggest single purchase by an insider was when Wei Zhang bought HK$309m worth of shares at a price of HK$4.46 per share. So it’s clear an insider wanted to buy, even at a higher price. 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. That purchase may suggest an expectation of positive returns over the long term.
In the last twelve months insiders purchased 124.27m shares for HK$554m. But insiders sold 51.60m shares worth HK$233m. In total, Hebei Construction Group insiders bought more than they sold over the last year. The average buy price was around HK$4.46. These transactions suggest that insiders have considered the current price of HK$3.85 attractive. You can see the insider transactions 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!
I will like Hebei Construction Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at Hebei Construction Group Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at Hebei Construction Group. Specifically, Wei Zhang ditched CN¥115m 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 directors think that the shares are a bargain.
Does Hebei Construction Group 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Hebei Construction Group insiders own 7.7% of the company, worth about HK$524m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Hebei Construction Group Insider Transactions Indicate?
An insider sold Hebei Construction Group shares recently, but they didn’t buy any. In contrast, they appear keener if you look at the last twelve months. And insider ownership remains quite considerable. So the recent selling doesn’t worry us. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Hebei Construction Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.