Fenbi Insiders Sell CN¥76m Of Stock, Possibly Signalling Caution

In the last year, many Fenbi Ltd. (HKG:2469) insiders sold a substantial stake in the company which may have sparked shareholders' attention. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

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

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Fenbi Insider Transactions Over The Last Year

In fact, the recent purchase by Co-Founder Xiaolong Zhang was not their only trade of Fenbi shares this year. They previously made a sale of -HK$48m worth of shares at a price of HK$2.88 per share. That means that an insider was selling shares at slightly below the current price (HK$3.04). 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. It is worth noting that this sale was only 7.2% of Xiaolong Zhang's holding.

Over the last year, we can see that insiders have bought 2.19m shares worth HK$6.3m. But they sold 26.15m shares for HK$76m. In total, Fenbi insiders sold more than they bought over the last year. 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!

See our latest analysis for Fenbi

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Insiders At Fenbi Have Bought Stock Recently

It's good to see that Fenbi insiders have made notable investments in the company's shares. In total, insiders bought HK$6.3m worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.

Insider Ownership Of Fenbi

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. Fenbi insiders own about HK$2.1b worth of shares (which is 30% 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.

So What Do The Fenbi Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. On the other hand the transaction history, over the last year, isn't so positive. The recent buying by some insiders , along with high insider ownership, suggest that Fenbi insiders are fairly aligned, and optimistic. 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. While conducting our analysis, we found that Fenbi has 1 warning sign and it would be unwise to ignore it.

But note: Fenbi may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.