Insiders Could Have Profited By Holding onto Tongdao Liepin Group Shares Despite 11% Drop

Tongdao Liepin Group's (HKG:6100) value has fallen 11% in the last week, but insiders who sold CN¥13m worth of stock over the last year have had less success. Given that the average selling price of CN¥8.00 is still lower than the current share price, insiders would probably have been better off keeping their shares.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Tongdao Liepin Group

The Last 12 Months Of Insider Transactions At Tongdao Liepin Group

The Chief Technology Officer, Xingmao Chen, made the biggest insider sale in the last 12 months. That single transaction was for HK$6.5m worth of shares at a price of HK$8.28 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (HK$3.01). So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was Xingmao Chen.

Xingmao Chen ditched 1.59m shares over the year. The average price per share was CN¥8.00. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart 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 Tongdao Liepin Group

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 27% of Tongdao Liepin Group shares, worth about HK$416m. 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 Tongdao Liepin Group Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Tongdao Liepin Group shares in the last quarter. While we feel good about high insider ownership of Tongdao Liepin Group, we can't say the same about the selling of shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of Tongdao Liepin Group.

Of course Tongdao Liepin Group 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.