It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Shentong Robot Education Group Company Limited (HKG:8206).
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, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Shentong Robot Education Group Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the insider, Shao Hui Yang, for HK$4.0m worth of shares, at about HK$0.22 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is HK$0.066. So it may not tell us anything about how insiders feel about the current share price. Shao Hui Yang was the only individual insider to sell over the last year.
The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insider Ownership of Shentong Robot Education Group
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Insiders own 29% of Shentong Robot Education Group shares, worth about HK$36m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Shentong Robot Education Group Insiders?
It doesn't really mean much that no insider has traded Shentong Robot Education Group shares in the last quarter. Our analysis of Shentong Robot Education Group insider transactions leaves us cautious. But it's good to see that insiders own shares in 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. To that end, you should learn about the 3 warning signs we've spotted with Shentong Robot Education Group (including 1 which makes us a bit uncomfortable).
But note: Shentong Robot Education Group 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, but not derivative transactions.
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