Insiders Who Sold CN¥8.4m Of Guangdong Kanghua Healthcare Made The Right Call

Despite the fact that Guangdong Kanghua Healthcare Co., Ltd. (HKG:3689) stock rose 14% last week, insiders who sold CN¥8.4m worth of stock in the previous 12 months are likely to be better off. Selling at an average price of CN¥1.46, which is higher than the current price, may have been the wisest decision for these insiders as their investment would have been worth less now than when they sold.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Guangdong Kanghua Healthcare

The Last 12 Months Of Insider Transactions At Guangdong Kanghua Healthcare

Over the last year, we can see that the biggest insider sale was by the insider, Zhaoming Chen, for HK$8.4m worth of shares, at about HK$1.46 per share. That means that even when the share price was below the current price of HK$2.15, 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. 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 54% of Zhaoming Chen's holding. The only individual insider seller over the last year was Zhaoming Chen. Notably Zhaoming Chen was also the biggest buyer, having purchased HK$282k worth of shares.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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

Insider Ownership

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Guangdong Kanghua Healthcare insiders own 71% of the company, worth about HK$510m. 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 Do The Guangdong Kanghua Healthcare Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Guangdong Kanghua Healthcare insiders selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Guangdong Kanghua Healthcare. To help with this, we've discovered 2 warning signs (1 is significant!) that you ought to be aware of before buying any shares in Guangdong Kanghua Healthcare.

Of course Guangdong Kanghua Healthcare 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.