Selling Unity Enterprise Holdings Shares at a Lower Price Than Current Market Value May Have Been a Costly Mistake for Insiders

Even though Unity Enterprise Holdings Limited (HKG:2195) has fallen by 13% over the past week , insiders who sold HK$15m worth of stock over the past year have had less luck. Insiders might have been better off holding onto their shares, given that the average selling price of HK$0.19 is still below the current share price.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Unity Enterprise Holdings

The Last 12 Months Of Insider Transactions At Unity Enterprise Holdings

The insider, Wing Sun Yeung, made the biggest insider sale in the last 12 months. That single transaction was for HK$4.9m worth of shares at a price of HK$0.21 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of HK$0.16. So it is hard to draw any strong conclusion from it. The only individual insider seller over the last year was Wing Sun Yeung.

Wing Sun Yeung ditched 78.00m shares over the year. The average price per share was HK$0.19. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like Unity Enterprise Holdings 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.

Does Unity Enterprise Holdings Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Unity Enterprise Holdings insiders own 60% of the company, currently worth about HK$112m based on the recent share price. 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 Unity Enterprise Holdings Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Unity Enterprise Holdings insiders selling. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 4 warning signs we've spotted with Unity Enterprise Holdings (including 1 which is a bit unpleasant).

But note: Unity Enterprise Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com