Insider Sellers Might Regret Selling Wai Hung Group Holdings Shares at a Lower Price Than Current Market Value

Despite the fact that Wai Hung Group Holdings Limited's (HKG:3321) value has dropped 10% in the last week insiders who sold MO$5.5m worth of stock in the past 12 months have had less success. Insiders would probably have been better off holding on to their shares given that the average selling price of MO$0.85 is still lower than the current share price.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Wai Hung Group Holdings

The Last 12 Months Of Insider Transactions At Wai Hung Group Holdings

In fact, the recent sale by insider Guanqi Chen was not their only trade of Wai Hung Group Holdings shares this year. They previously purchased HK$4.2m worth of shares at a price of HK$0.93 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.62). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Guanqi Chen was the only individual insider to buy shares in the last twelve months. Notably Guanqi Chen was also the biggest seller.

Guanqi Chen divested 6.48m shares over the last 12 months at an average price of MO$0.85. 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 Wai Hung Group Holdings better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insiders At Wai Hung Group Holdings Have Sold Stock Recently

Over the last three months, we've seen notably more insider selling, than insider buying, at Wai Hung Group Holdings. We note insider Guanqi Chen cashed in HK$5.5m worth of shares. On the other hand we note insider Guanqi Chen bought HK$4.2m worth of shares , as previously mentioned . Generally this level of net selling might be considered a bit bearish.

Insider Ownership Of Wai Hung Group Holdings

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Wai Hung Group Holdings insiders own 69% of the company, currently worth about HK$227m based on the recent share price. 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 Does This Data Suggest About Wai Hung Group Holdings Insiders?

The stark truth for Wai Hung Group Holdings is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. 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. Every company has risks, and we've spotted 3 warning signs for Wai Hung Group Holdings (of which 1 is significant!) you should know about.

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 of direct interests only, but not derivative transactions or indirect interests.

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

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.