The Deputy Chairman & CEO of China Modern Dairy Holdings Ltd. (HKG:1117), Lina Gao, Just Sold 71% Of Their Holding

By
Simply Wall St
Published
June 08, 2021
SEHK:1117
Source: Shutterstock

Some China Modern Dairy Holdings Ltd. (HKG:1117) shareholders may be a little concerned to see that the Deputy Chairman & CEO, Lina Gao, recently sold a substantial HK$49m worth of stock at a price of HK$1.67 per share. That diminished their holding by a very significant 71%, which arguably implies a strong desire to reallocate capital.

Check out our latest analysis for China Modern Dairy Holdings

China Modern Dairy Holdings Insider Transactions Over The Last Year

Notably, that recent sale by Lina Gao is the biggest insider sale of China Modern Dairy Holdings shares that we've seen in the last year. That means that an insider was selling shares at slightly below the current price (HK$1.87). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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 71% of Lina Gao's holding.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
SEHK:1117 Insider Trading Volume June 8th 2021

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does China Modern Dairy Holdings 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. Our data indicates that China Modern Dairy Holdings insiders own about HK$75m worth of shares (which is 0.6% of the company). But they may have an indirect interest through a corporate structure that we haven't picked up on. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

What Might The Insider Transactions At China Modern Dairy Holdings Tell Us?

An insider sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. But it is good to see that China Modern Dairy Holdings is growing earnings. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing China Modern Dairy Holdings. Every company has risks, and we've spotted 5 warning signs for China Modern Dairy Holdings you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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