Insiders of Texhong Textile Group Limited (HKG:2678) would have made a tidy sum after selling CN¥21m worth of stock at a high price

Simply Wall St
February 17, 2022
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Despite the fact that Texhong Textile Group Limited (HKG:2678) stock rose 5.5% last week, insiders who sold CN¥21m worth of stock in the previous 12 months are likely to be better off. Selling at an average price of CN¥11.82, which is higher than the current price might have been the right call as holding on to stock would have meant their investment would be worth less now than it was at the time of sale.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Texhong Textile Group

The Last 12 Months Of Insider Transactions At Texhong Textile Group

The COO & Executive Director Daoping Tang made the biggest insider purchase in the last 12 months. That single transaction was for HK$8.7m worth of shares at a price of HK$8.70 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of HK$10.76. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

All up, insiders sold more shares in Texhong Textile Group than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

SEHK:2678 Insider Trading Volume February 17th 2022

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Texhong Textile Group insiders own about HK$5.0b worth of shares (which is 51% 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.

What Might The Insider Transactions At Texhong Textile Group Tell Us?

It doesn't really mean much that no insider has traded Texhong Textile Group shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Texhong Textile Group insiders selling. 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 2 warning signs for Texhong Textile Group (1 is concerning!) that we believe deserve your full attention.

Of course Texhong Textile Group 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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