Stock Analysis

For Walnut Capital Insiders, Selling HK$10m Of Shares Was A Smart Move

Published
SEHK:905

Despite a 10% gain in Walnut Capital Limited's (HKG:905) stock price this week, shareholders shouldn't let up. In spite of the relatively cheap prices, insiders made the decision to sell HK$10m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Walnut Capital

Walnut Capital Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the CEO & Executive Director, Bun Man Mung, for HK$6.6m worth of shares, at about HK$0.058 per share. That means that even when the share price was below the current price of HK$0.24, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 18% of Bun Man Mung's holding. Bun Man Mung was the only individual insider to sell over the last year.

Bun Man Mung ditched 188.53m shares over the year. The average price per share was HK$0.055. 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!

SEHK:905 Insider Trading Volume November 22nd 2024

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Insider Ownership Of Walnut Capital

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Walnut Capital insiders own about HK$144m worth of shares (which is 56% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Walnut Capital Insiders?

It doesn't really mean much that no insider has traded Walnut Capital shares in the last quarter. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Walnut Capital insider transactions don't fill us with confidence. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Walnut Capital. Our analysis shows 4 warning signs for Walnut Capital (1 shouldn't be ignored!) and we strongly recommend you look at them before investing.

But note: Walnut Capital 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.

Valuation is complex, but we're here to simplify it.

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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.