Insider Sellers Might Regret Selling Shenzhen Pagoda Industrial (Group) Shares at a Lower Price Than Current Market Value

Even though Shenzhen Pagoda Industrial (Group) Corporation Limited (HKG:2411) has fallen by 11% over the past week , insiders who sold CN¥24m worth of stock over the past year have had less luck. Insiders might have been better off holding onto their shares, given that the average selling price of CN¥3.18 is still below the current share price.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Shenzhen Pagoda Industrial (Group)

Shenzhen Pagoda Industrial (Group) Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Executive Deputy GM & Executive Director, Yue Jiao, sold HK$6.6m worth of shares at a price of HK$3.28 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is HK$1.89. So it is hard to draw any strong conclusion from it. Yue Jiao was the only individual insider to sell shares in the last twelve months.

Yue Jiao ditched 7.51m shares over the year. The average price per share was CN¥3.18. You can see a visual depiction of insider transactions (by companies and 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 Shenzhen Pagoda Industrial (Group) better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Shenzhen Pagoda Industrial (Group) Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Shenzhen Pagoda Industrial (Group) shares. In total, Executive Deputy GM & Executive Director Yue Jiao dumped HK$24m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Does Shenzhen Pagoda Industrial (Group) Boast High Insider Ownership?

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Shenzhen Pagoda Industrial (Group) insiders own 27% of the company, worth about HK$806m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Shenzhen Pagoda Industrial (Group) Tell Us?

An insider sold Shenzhen Pagoda Industrial (Group) shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. But it is good to see that Shenzhen Pagoda Industrial (Group) is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. While it's good to be aware of 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. To that end, you should learn about the 2 warning signs we've spotted with Shenzhen Pagoda Industrial (Group) (including 1 which doesn't sit too well with us).

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com