This Insider Has Just Sold Shares In China East Education Holdings

We wouldn't blame China East Education Holdings Limited (HKG:667) shareholders if they were a little worried about the fact that Guoqing Xiao, the Executive Deputy Chairman recently netted about HK$339m selling shares at an average price of HK$5.65. That's a big disposal, and it decreased their holding size by 14%, which is notable but not too bad.

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The Last 12 Months Of Insider Transactions At China East Education Holdings

Notably, that recent sale by Guoqing Xiao is the biggest insider sale of China East Education Holdings shares that we've seen in the last year. That means that even when the share price was below the current price of HK$6.32, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 14% of Guoqing Xiao's holding.

Guoqing Xiao divested 80.00m shares over the last 12 months at an average price of CN¥6.07. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Check out our latest analysis for China East Education Holdings

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Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. China East Education Holdings insiders own about HK$10b worth of shares (which is 74% 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.

What Might The Insider Transactions At China East Education Holdings Tell Us?

An insider sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. But since China East Education Holdings is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with China East Education Holdings and understanding them should be part of your investment process.

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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.