Insider Sellers Might Regret Selling China Mengniu Dairy Shares at a Lower Price Than Current Market Value

China Mengniu Dairy Company Limited's (HKG:2319) stock price has dropped 13% in the previous week, but insiders who sold CN¥15m in stock over the past year have had less luck. Insiders would probably have been better off holding on to their shares given that the average selling price of CN¥26.34 is still lower than the current share price.

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.

View our latest analysis for China Mengniu Dairy

The Last 12 Months Of Insider Transactions At China Mengniu Dairy

Over the last year, we can see that the biggest insider sale was by the Executive Vice-Chairman, Minfang Lu, for HK$13m worth of shares, at about HK$26.33 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of HK$17.78. So it is hard to draw any strong conclusion from it. Minfang Lu was the only individual insider to sell over the last year.

Minfang Lu sold a total of 585.00k shares over the year at an average price of CN¥26.34. 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!

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Insider Ownership Of China Mengniu Dairy

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. Insiders own 0.1% of China Mengniu Dairy shares, worth about HK$102m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The China Mengniu Dairy Insider Transactions Indicate?

It doesn't really mean much that no insider has traded China Mengniu Dairy shares in the last quarter. While we feel good about high insider ownership of China Mengniu Dairy, we can't say the same about the selling of shares. Therefore, you should definitely take a look at this FREE report showing analyst forecasts for China Mengniu Dairy.

Of course China Mengniu Dairy 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 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.