For K2 F&B Holdings Insiders, Selling S$13m Of Shares Was A Smart Move

While K2 F&B Holdings Limited (HKG:2108) shareholders have enjoyed a good week with stock up 12%, they need remain vigilant. Even though stock prices were relatively low, insiders elected to sell S$13m worth of stock in the last year, which could indicate some expected downturn.

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.

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The Last 12 Months Of Insider Transactions At K2 F&B Holdings

Over the last year, we can see that the biggest insider sale was by the insider, Soon Huat Toh, for HK$13m worth of shares, at about HK$0.23 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of HK$0.33. 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. We note that the biggest single sale was 99% of Soon Huat Toh's holding. The only individual insider seller over the last year was Soon Huat Toh.

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!

Check out our latest analysis for K2 F&B Holdings

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K2 F&B Holdings Insiders Are Selling The Stock

We have seen a bit of insider selling at K2 F&B Holdings, over the last three months. HK$13m worth of shares were sold by insider Soon Huat Toh. But (as above) at least we saw HK$13m worth of buying. While it's not great to see insider selling, the net amount sold isn't enough for us to want to read anything into it.

Insider Ownership Of K2 F&B Holdings

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. K2 F&B Holdings insiders own about HK$217m worth of shares (which is 82% 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 Do The K2 F&B Holdings Insider Transactions Indicate?

Unfortunately, there has been more insider selling of K2 F&B Holdings stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. It is good to see high insider ownership, but the insider selling leaves us cautious. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For instance, we've identified 5 warning signs for K2 F&B Holdings (1 is concerning) you should be aware of.

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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.