Insiders Of Acme International Holdings Retain HK$44m Of Investment Selling At Higher Prices

Last week, Acme International Holdings Limited's (HKG:1870) stock jumped 15%, but insiders who sold HK$44m worth of stock in over the past year are likely to be in a better position. Selling at an average price of HK$1.05, which is higher than the current price, may have been the best move for these insiders because their investment would have been worth less now than when they sold.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Acme International Holdings

Acme International Holdings Insider Transactions Over The Last Year

The Executive Chairman, Kam Tim Kwan, made the biggest insider sale in the last 12 months. That single transaction was for HK$17m worth of shares at a price of HK$1.00 each. That means that an insider was selling shares at slightly below the current price (HK$1.26). 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 14% of Kam Tim Kwan's holding. Kam Tim Kwan was the only individual insider to sell over the last year.

Kam Tim Kwan divested 41.50m shares over the last 12 months at an average price of HK$1.05. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insiders At Acme International Holdings Have Sold Stock Recently

The last three months saw significant insider selling at Acme International Holdings. Specifically, Executive Chairman Kam Tim Kwan ditched HK$5.5m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Acme International Holdings insiders own 55% of the company, currently worth about HK$417m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Acme International Holdings Tell Us?

An insider sold stock recently, but they haven't been buying. And our longer term analysis of insider transactions didn't bring confidence, either. 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. 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. When we did our research, we found 4 warning signs for Acme International Holdings (2 are significant!) that we believe deserve your full attention.

Of course Acme International Holdings 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 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.