Insiders Of China Aluminum Cans Holdings Retain HK$16m Of Investment Selling At Higher Prices

Despite the fact that China Aluminum Cans Holdings Limited (HKG:6898) stock rose 16% last week, insiders who sold HK$16m worth of stock in the previous 12 months are likely to be better off. Selling at an average price of HK$0.40, which is higher than the current price, may have been the best move for these insiders because 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, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for China Aluminum Cans Holdings

The Last 12 Months Of Insider Transactions At China Aluminum Cans Holdings

In the last twelve months, the biggest single sale by an insider was when the Executive Chairman & GM, Wan Tsang Lin, sold HK$16m worth of shares at a price of HK$0.40 per share. That means that even when the share price was below the current price of HK$0.65, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 6.1% of Wan Tsang Lin's holding. The only individual insider seller over the last year was Wan Tsang Lin.

The chart below shows insider transactions (by companies and individuals) over the last year. 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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China Aluminum Cans Holdings Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at China Aluminum Cans Holdings. In total, Executive Chairman & GM Wan Tsang Lin sold HK$16m 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

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. China Aluminum Cans Holdings insiders own 65% of the company, currently worth about HK$403m based on the recent share price. 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 China Aluminum Cans Holdings Insider Transactions Indicate?

An insider hasn't bought China Aluminum Cans Holdings stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. But since China Aluminum Cans Holdings is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing China Aluminum Cans Holdings. Be aware that China Aluminum Cans Holdings is showing 4 warning signs in our investment analysis, and 1 of those doesn't sit too well with us...

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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.