Don't Ignore The Fact That This Insider Just Sold Some Shares In Royale Furniture Holdings Limited (HKG:1198)

Some Royale Furniture Holdings Limited (HKG:1198) shareholders may be a little concerned to see that the Co-Founder & Executive Chairman, Kam Pang Tse, recently sold a substantial HK$18m worth of stock at a price of HK$1.20 per share. However, that sale only accounted for 1.8% of their holding, so arguably it doesn't say much about their conviction.

View our latest analysis for Royale Furniture Holdings

The Last 12 Months Of Insider Transactions At Royale Furniture Holdings

Notably, that recent sale by Kam Pang Tse is the biggest insider sale of Royale Furniture Holdings shares that we've seen in the last year. That means that even when the share price was below the current price of HK$1.31, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 1.8% of Kam Pang Tse's holding.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Does Royale Furniture Holdings Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Royale Furniture Holdings insiders own 31% of the company, currently worth about HK$1.1b based on the recent share price. 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 Royale Furniture Holdings Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. 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. Case in point: We've spotted 1 warning sign for Royale Furniture Holdings you should be aware of.

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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.

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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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