We wouldn't blame Great Water Holdings Limited (HKG:8196) shareholders if they were a little worried about the fact that Yao Zhang, a company insider, recently netted about HK$14m selling shares at an average price of HK$0.50. That diminished their holding by a very significant 59%, which arguably implies a strong desire to reallocate capital.
The Last 12 Months Of Insider Transactions At Great Water Holdings
In fact, the recent sale by Yao Zhang was the biggest sale of Great Water Holdings shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was below the current price of HK$0.58, 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. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was 59% of Yao Zhang's stake.
Yao Zhang sold a total of 51.10m shares over the year at an average price of CN¥0.47. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
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Does Great Water Holdings 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. Great Water Holdings insiders own about HK$105m worth of shares (which is 60% 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.
So What Does This Data Suggest About Great Water Holdings Insiders?
An insider sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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. Our analysis shows 4 warning signs for Great Water Holdings (1 can't be ignored!) and we strongly recommend you look at these before investing.
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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.
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.