Selling HK$33m worth of Ka Shui International Holdings Limited (HKG:822) stock at high prices would have gotten insiders a handsome reward

By
Simply Wall St
Published
October 26, 2021
SEHK:822
Source: Shutterstock

Despite the fact that Ka Shui International Holdings Limited (HKG:822) stock rose 17% last week, insiders who sold HK$33m worth of stock in the previous 12 months are likely to be better off. Holding on to stock would have meant their investment would be worth less now than it was at the time of sale. Thus selling at an average price of HK$0.81, which is higher than the current price, may have been the best decision.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Ka Shui International Holdings

Ka Shui International Holdings Insider Transactions Over The Last Year

The Founder & Chairman, Yuen Fat Lee, made the biggest insider sale in the last 12 months. That single transaction was for HK$14m worth of shares at a price of HK$0.85 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is HK$0.69. So it may not shed much light on insider confidence at current levels. Yuen Fat Lee was the only individual insider to sell shares in the last twelve months.

Yuen Fat Lee divested 40.00m shares over the last 12 months at an average price of HK$0.81. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
SEHK:822 Insider Trading Volume October 26th 2021

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Ka Shui International Holdings insiders own about HK$406m worth of shares (which is 66% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Ka Shui International Holdings Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Ka Shui International Holdings shares in the last quarter. While we feel good about high insider ownership of Ka Shui International Holdings, we can't say the same about the selling of shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Ka Shui International Holdings. Every company has risks, and we've spotted 2 warning signs for Ka Shui International Holdings you should know about.

Of course Ka Shui 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, but not derivative transactions.

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