Stock Analysis

Insiders who sold Wai Chun Bio-Technology Limited (HKG:660) earlier this year probably made the right call as market cap dropped by HK$2.4m

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Insiders seem to have made the most of their holdings by selling HK$1.0m worth of Wai Chun Bio-Technology Limited (HKG:660) stock at an average sell price of HK$0.15 during the past year. The company's market valuation decreased by HK$2.4m after the stock price dropped 11% over the past week, but insiders were spared from painful losses.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Wai Chun Bio-Technology

Wai Chun Bio-Technology Insider Transactions Over The Last Year

The insider Guanyu Chen made the biggest insider purchase in the last 12 months. That single transaction was for HK$655k worth of shares at a price of HK$0.69 each. That means that an insider was happy to buy shares at above the current price of HK$0.12. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. The only individual insider to buy over the last year was Guanyu Chen. We note that Guanyu Chen was both the biggest buyer and the biggest seller.

In total, Wai Chun Bio-Technology insiders sold more than they bought over the last year. 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!

SEHK:660 Insider Trading Volume March 17th 2023

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

Wai Chun Bio-Technology Insiders Are Selling The Stock

We have seen a bit of insider selling at Wai Chun Bio-Technology, over the last three months. In total, insiders sold HK$1.0m worth of shares in that time. But the good news is that insider Guanyu Chen bought HK$655k worth. While it's not great to see insider selling, the net amount sold isn't enough for us to want to read anything into it.

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. Wai Chun Bio-Technology insiders own about HK$15m worth of shares (which is 74% 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 Wai Chun Bio-Technology Tell Us?

Unfortunately, there has been more insider selling of Wai Chun Bio-Technology stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 4 warning signs for Wai Chun Bio-Technology (3 are concerning) you should be aware of.

But note: Wai Chun Bio-Technology 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, but not derivative transactions.

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