As IPE Group Limited's (HKG:929)) market cap dropped by HK$105m, insiders who sold HK$50m worth of stock were able to offset their losses

By
Simply Wall St
Published
March 15, 2022
SEHK:929
Source: Shutterstock

By selling HK$50m worth of IPE Group Limited (HKG:929) stock at an average sell price of HK$0.85 over the last year, insiders seemed to have made the most of their holdings. The company’s market cap plunged by HK$105m after price dropped by 11% last week but insiders were able to limit their loss to an extent.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for IPE Group

The Last 12 Months Of Insider Transactions At IPE Group

Over the last year, we can see that the biggest insider purchase was by Executive Chairman & CEO Guang Sheng Zeng for HK$43m worth of shares, at about HK$0.85 per share. That means that an insider was happy to buy shares at above the current price of HK$0.78. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Guang Sheng Zeng was the only individual insider to buy during the last year.

Siu On Chui ditched 58.60m shares over the year. The average price per share was HK$0.85. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
SEHK:929 Insider Trading Volume March 15th 2022

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

IPE Group Insiders Are Selling The Stock

The last three months saw significant insider selling at IPE Group. Specifically, insider Siu On Chui ditched HK$7.3m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

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. It appears that IPE Group insiders own 16% of the company, worth about HK$135m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The IPE Group Insider Transactions Indicate?

An insider hasn't bought IPE Group stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that IPE Group is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 5 warning signs for IPE Group (1 doesn't sit too well with us) you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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