Should You Review Recent Insider Transactions At Macau Legend Development Limited (HKG:1680)?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 before you buy or sell Macau Legend Development Limited (HKG:1680), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

Check out our latest analysis for Macau Legend Development

Macau Legend Development Insider Transactions Over The Last Year

The Co-Chairman of the Board, Kam Fai Chow, made the biggest insider sale in the last 12 months. That single transaction was for HK$1.3b worth of shares at a price of HK$1.05 each. So what is clear is that an insider saw fit to sell at around the current price of HK$0.97. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.

All up, insiders sold more shares in Macau Legend Development than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

I will like Macau Legend Development better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Macau Legend Development Insiders Bought Stock Recently

There has been significantly more insider buying, than selling, at Macau Legend Development, over the last three months. We can see that Executive Co-Chairman & CEO Weng Lin Chan paid HK$680m for shares in the company. On the other hand, insider Ka Wing Tong netted HK$3.7m by selling. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Does Macau Legend Development 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. We usually like to see fairly high levels of insider ownership. Macau Legend Development insiders own about HK$2.7b worth of shares (which is 46% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Macau Legend Development Tell Us?

It is good to see the recent insider purchase. On the other hand the transaction history, over the last year, isn't so positive. The high levels of insider ownership, and the recent buying by an insider suggests they are well aligned and optimistic. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

Of course Macau Legend Development may not be the best stock to buy. So you may wish to see this free collection of high quality 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, 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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