Don't Ignore The Insider Selling In Tencent Holdings

We wouldn't blame Tencent Holdings Limited (HKG:700) shareholders if they were a little worried about the fact that Ian Charles Stone, the Independent Non-Executive Director recently netted about HK$9.2m selling shares at an average price of HK$368. However, that sale only accounted for 7.9% of their holding, so arguably it doesn't say much about their conviction.

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The Last 12 Months Of Insider Transactions At Tencent Holdings

In fact, the recent sale by Ian Charles Stone was the biggest sale of Tencent Holdings shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was below the current price of HK$378, 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 7.9% of Ian Charles Stone's stake.

Tencent Holdings insiders didn't buy any shares 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!

I will like Tencent Holdings better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Tencent Holdings insiders own 7.7% of the company, currently worth about HK$268b 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.

What Might The Insider Transactions At Tencent Holdings Tell Us?

An insider hasn't bought Tencent 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. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example - Tencent Holdings has 1 warning sign we think you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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 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.