Frontage Holdings Corporation's (HKG:1521)) market cap declines to HK$10b but insiders who sold US$8.4m stock were able to hedge their losses

By
Simply Wall St
Published
October 03, 2021
SEHK:1521
Source: Shutterstock

Insiders at Frontage Holdings Corporation (HKG:1521) sold US$8.4m worth of stock at an average price of US$6.09 a share over the past year, making the most of their investment. The company's market valuation decreased by HK$718m after the stock price dropped 6.5% over the past week, but insiders were spared from painful losses.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Frontage Holdings

Frontage Holdings Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Executive Director, Zhihe Li, sold HK$6.1m worth of shares at a price of HK$6.12 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of HK$5.05. So it is hard to draw any strong conclusion from it. Zhihe Li was the only individual insider to sell over the last year.

Zhihe Li sold a total of 1.38m shares over the year at an average price of US$6.09. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
SEHK:1521 Insider Trading Volume October 4th 2021

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

Does Frontage Holdings Boast High 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. Frontage Holdings insiders own about HK$224m worth of shares. That equates to 2.2% of the company. 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 Frontage Holdings Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Frontage Holdings shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Frontage Holdings insiders selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Frontage Holdings. Our analysis shows 2 warning signs for Frontage Holdings (1 is concerning!) and we strongly recommend you look at these before investing.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.