It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Tse Sui Luen Jewellery (International) Limited (HKG:417).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
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The Last 12 Months Of Insider Transactions At Tse Sui Luen Jewellery (International)
Deputy Chief Executive Officer Tat Tse made the biggest insider purchase in the last 12 months. That single transaction was for HK$1.3m worth of shares at a price of HK$2.25 each. That means that an insider was happy to buy shares at above the current price. 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 generally consider it a positive if insiders have been buying on market, even above the current price.
In the last twelve months insiders paid HK$1.3m for 586.07k shares purchased. Overall, Tse Sui Luen Jewellery (International) insiders were net buyers last year. They paid about HK$2.25 on average. This is nice to see since it implies that insiders might see value around current prices (around HK$1.79). You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Tse Sui Luen Jewellery (International) 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 Tse Sui Luen Jewellery (International) 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Tse Sui Luen Jewellery (International) insiders own about HK$333m worth of shares (which is 73% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Tse Sui Luen Jewellery (International) Insiders?
The fact that there have been no Tse Sui Luen Jewellery (International) insider transactions recently certainly doesn’t bother us. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, Tse Sui Luen Jewellery (International) insiders feel good about the company’s future. Along with insider transactions, I recommend checking if Tse Sui Luen Jewellery (International) is growing revenue. This free chart of historic revenue and earnings should make that easy.
Of course Tse Sui Luen Jewellery (International) may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.