Insiders Who Sold HK$10m Of Walnut Capital Made The Right Call

While Walnut Capital Limited (HKG:905) shareholders have enjoyed a good week with stock up 11%, they need remain vigilant. Although prices were relatively low, insiders chose to sell HK$10m worth of stock in the past 12 months. This could be a sign of impending weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Walnut Capital

The Last 12 Months Of Insider Transactions At Walnut Capital

In the last twelve months, the biggest single sale by an insider was when the CEO & Executive Director, Bun Man Mung, sold HK$6.6m worth of shares at a price of HK$0.058 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of HK$0.20. 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. 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. 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 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!

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

Insiders At Walnut Capital Have Sold Stock Recently

The last three months saw significant insider selling at Walnut Capital. In total, CEO & Executive Director Bun Man Mung sold HK$10m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Walnut Capital insiders own about HK$121m 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.

What Might The Insider Transactions At Walnut Capital Tell Us?

An insider hasn't bought Walnut Capital stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 5 warning signs for Walnut Capital you should be aware of, and 2 of these don't sit too well with us.

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.

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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