Who Has Been Buying Melco International Development Limited (HKG:200) Shares?

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Melco International Development Limited (HKG:200).

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, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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'.

See our latest analysis for Melco International Development

The Last 12 Months Of Insider Transactions At Melco International Development

Over the last year, we can see that the biggest insider purchase was by Chairman & CEO Yau Lung Ho for HK$42m worth of shares, at about HK$14.92 per share. So it's clear an insider wanted to buy, at around the current price, which is HK$15.30. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. Happily, the Melco International Development insider decided to buy shares at close to current prices. The only individual insider to buy over the last year was Yau Lung Ho.

Yau Lung Ho purchased 31.23m shares over the year. The average price per share was HK$14.12. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Melco International Development is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at Melco International Development Have Sold Stock Recently

The last three months saw significant insider selling at Melco International Development. Specifically, President Evan Winkler ditched HK$27m 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.

Does Melco International Development Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Melco International Development insiders own about HK$8.9b worth of shares (which is 39% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Melco International Development Insiders?

An insider hasn't bought Melco International Development stock in the last three months, but there was some selling. On the other hand, the insider transactions over the last year are encouraging. On top of that, insiders own a significant portion of the company. So we're happy to look past recent trading. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 2 warning signs for Melco International Development you should be aware of, and 1 of these shouldn't be ignored.

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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