Insiders Who Sold HK$51m Of ST International Holdings Made The Right Call

Despite the fact that ST International Holdings Company Limited (HKG:8521) stock rose 59% last week, insiders who sold HK$51m worth of stock in the previous 12 months are likely to be better off. Selling at an average price of HK$0.14, which is higher than the current price, may have been the wisest decision for these insiders as their investment would have been worth less now than when they sold.

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.

See our latest analysis for ST International Holdings

The Last 12 Months Of Insider Transactions At ST International Holdings

In the last twelve months, the biggest single sale by an insider was when the Executive Chairman & Compliance Officer, Kai Hung Wong, sold HK$28m worth of shares at a price of HK$0.10 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of HK$0.25. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was 77% of Kai Hung Wong's stake. Kai Hung Wong was the only individual insider to sell over the last year.

Happily, we note that in the last year insiders paid HK$46m for 310.29m shares. But insiders sold 360.00m shares worth HK$51m. Kai Hung Wong sold a total of 360.00m shares over the year at an average price of HK$0.14. 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!

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).

Insider Ownership

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. ST International Holdings insiders own 65% of the company, currently worth about HK$76m 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 ST International Holdings Insider Transactions Indicate?

We can't make any useful conclusions about recent trading, since insider buying and selling has been balanced. While we gain confidence from high insider ownership of ST International Holdings, we can't say the same about their transactions in the last year, in the absence of further purchases. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Be aware that ST International Holdings is showing 4 warning signs in our investment analysis, and 2 of those make us uncomfortable...

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

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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.