Stock Analysis

Have Insiders Been Selling GT Steel Construction Group Limited (HKG:8402) Shares?

SEHK:8402
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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in GT Steel Construction Group Limited (HKG:8402).

What Is Insider Selling?

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. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

See our latest analysis for GT Steel Construction Group

The Last 12 Months Of Insider Transactions At GT Steel Construction Group

Over the last year, we can see that the biggest insider sale was by the Founder, Cheng Yew Ong, for HK$834k worth of shares, at about HK$0.23 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is HK$0.095. So it may not shed much light on insider confidence at current levels. Cheng Yew Ong was the only individual insider to sell shares in the last twelve months.

The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
SEHK:8402 Insider Trading Volume December 16th 2020

I will like GT Steel Construction Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Does GT Steel Construction Group Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. GT Steel Construction Group insiders own about HK$34m worth of shares (which is 74% of the company). 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 GT Steel Construction Group Insider Transactions Indicate?

It doesn't really mean much that no insider has traded GT Steel Construction Group shares in the last quarter. While we feel good about high insider ownership of GT Steel Construction 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. When we did our research, we found 3 warning signs for GT Steel Construction Group (2 are concerning!) that we believe deserve your full attention.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, 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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