Insiders who sold HK$9.2m worth of Major Holdings Limited (HKG:1389) stock last year were handsomely rewarded

By
Simply Wall St
Published
September 01, 2021
SEHK:1389
Source: Shutterstock

Even though Major Holdings Limited (HKG:1389) stock gained 14% last week, insiders who sold HK$9.2m worth of stock over the past year are probably better off. Selling at an average price of HK$0.043, which is higher than the current price, may have been the best move for these insiders because 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 Major Holdings

Major Holdings Insider Transactions Over The Last Year

The CEO & Chairman Chun To Cheung made the biggest insider purchase in the last 12 months. That single transaction was for HK$7.2m worth of shares at a price of HK$0.044 each. That means that an insider was happy to buy shares at above the current price of HK$0.041. It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was Chun To Cheung.

The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
SEHK:1389 Insider Trading Volume September 1st 2021

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership of Major Holdings

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Major Holdings insiders own 73% of the company, worth about HK$100m. 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 Major Holdings Insiders?

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 Major Holdings, we can't say the same about their transactions in the last year, in the absence of further purchases. 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. For instance, we've identified 3 warning signs for Major Holdings (1 doesn't sit too well with us) you should be aware of.

But note: Major Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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, but not derivative transactions.

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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.
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