Are Insiders Selling Changsha Broad Homes Industrial Group Co., Ltd. (HKG:2163) Stock?

We often see insiders buying up shares in companies that perform well over the long term. 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 we'll take a look at whether insiders have been buying or selling shares in Changsha Broad Homes Industrial Group Co., Ltd. (HKG:2163).

What Is Insider Buying?

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, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

View our latest analysis for Changsha Broad Homes Industrial Group

The Last 12 Months Of Insider Transactions At Changsha Broad Homes Industrial Group

Over the last year, we can see that the biggest insider sale was by the Founder & Executive Chairman, Jian Zhang, for HK$3.0m worth of shares, at about HK$10.97 per share. That means that even when the share price was below the current price of HK$14.92, an insider wanted to cash in some shares. 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. This single sale was 68% of Jian Zhang's stake. Jian Zhang was the only individual insider to sell over the last year.

Jian Zhang sold a total of 284.10k shares over the year at an average price of CN¥10.99. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does Changsha Broad Homes Industrial Group 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. Changsha Broad Homes Industrial Group insiders own about HK$4.0b worth of shares (which is 52% 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.

What Might The Insider Transactions At Changsha Broad Homes Industrial Group Tell Us?

It doesn't really mean much that no insider has traded Changsha Broad Homes Industrial Group shares in the last quarter. While we feel good about high insider ownership of Changsha Broad Homes Industrial Group, we can't say the same about the selling of shares. 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. In terms of investment risks, we've identified 4 warning signs with Changsha Broad Homes Industrial Group and understanding these should be part of your investment process.

Of course Changsha Broad Homes Industrial Group 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, but not derivative transactions.

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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. 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.
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