Should You Take Comfort From Insider Transactions At LUZHENG FUTURES Company Limited (HKG:1461)?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in LUZHENG FUTURES Company Limited (HKG:1461).

What Is Insider Selling?

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.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

Check out our latest analysis for LUZHENG FUTURES

LUZHENG FUTURES Insider Transactions Over The Last Year

While no particular insider transaction stood out, we can still look at the overall trading.

In the last twelve months LUZHENG FUTURES insiders were buying shares, but not selling. 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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Does LUZHENG FUTURES Boast High 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. Based on our data, LUZHENG FUTURES insiders have about 1.8% of the stock, worth approximately HK$11m. We consider this fairly low insider ownership.

So What Does This Data Suggest About LUZHENG FUTURES Insiders?

It doesn't really mean much that no insider has traded LUZHENG FUTURES shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in LUZHENG FUTURES and their transactions don't cause us concern. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 3 warning signs for LUZHENG FUTURES (of which 1 is potentially serious!) you should know about.

Of course LUZHENG FUTURES may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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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This article by Simply Wall St is general in nature. 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.
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