CA Cultural Technology Group Limited (HKG:1566) Insiders Have Been Selling

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in CA Cultural Technology Group Limited (HKG:1566).

What Is Insider Selling?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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'.

See our latest analysis for CA Cultural Technology Group

The Last 12 Months Of Insider Transactions At CA Cultural Technology Group

In the last twelve months, the biggest single sale by an insider was when the Founder, Heung Chung Chong, sold HK$228m worth of shares at a price of HK$2.10 per share. That means that an insider was selling shares at slightly below the current price (HK$2.38). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 26% of Heung Chung Chong's stake. Notably Heung Chung Chong was also the biggest buyer, having purchased HK$25m worth of shares.

In total, CA Cultural Technology Group insiders sold more than they bought over the last year. 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).

CA Cultural Technology Group Insiders Are Selling The Stock

The last three months saw significant insider selling at CA Cultural Technology Group. In total, insider Den Fung Or dumped HK$7.0m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership of CA Cultural Technology Group

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. CA Cultural Technology Group insiders own 42% of the company, currently worth about HK$962m based on the recent share price. 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 CA Cultural Technology Group Tell Us?

An insider sold CA Cultural Technology Group shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. But since CA Cultural Technology Group is profitable and growing, we're not too worried by this. 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 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. To help with this, we've discovered 6 warning signs (2 are potentially serious!) that you ought to be aware of before buying any shares in CA Cultural Technology Group.

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, but not derivative transactions.

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This article by Simply Wall St is general in nature. 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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