Insiders Could Have Profited By Holding onto China Beststudy Education Group Shares Despite 14% Drop

Despite the fact that China Beststudy Education Group's (HKG:3978) value has dropped 14% in the last week insiders who sold CN¥11m worth of stock in the past 12 months have had less success. The average selling price of CN¥2.87 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for China Beststudy Education Group

China Beststudy Education Group Insider Transactions Over The Last Year

The Non-Executive Director, Wenhui Xu, made the biggest insider sale in the last 12 months. That single transaction was for HK$1.3m worth of shares at a price of HK$3.82 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is HK$2.53. So it may not tell us anything about how insiders feel about the current share price. Wenhui Xu was the only individual insider to sell shares in the last twelve months.

Happily, we note that in the last year insiders paid HK$552k for 329.00k shares. But they sold 3.99m shares for HK$11m. Wenhui Xu sold a total of 3.99m shares over the year at an average price of CN¥2.87. 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!

I will like China Beststudy Education Group better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

China Beststudy Education Group Insiders Are Selling The Stock

The last quarter saw substantial insider selling of China Beststudy Education Group shares. In total, Non-Executive Director Wenhui Xu dumped HK$6.3m 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 China Beststudy Education Group Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It's great to see that China Beststudy Education Group insiders own 79% of the company, worth about HK$1.7b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At China Beststudy Education Group Tell Us?

An insider hasn't bought China Beststudy Education Group stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn't bring confidence, either. But since China Beststudy Education Group is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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 2 warning signs for China Beststudy Education Group (1 is significant) you should be aware of.

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 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com