It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Dawnrays Pharmaceutical (Holdings) Limited (HKG:2348), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.
The Last 12 Months Of Insider Transactions At Dawnrays Pharmaceutical (Holdings)
CEO & Executive Director Shaojun Chen made the biggest insider purchase in the last 12 months. That single transaction was for HK$2.2m worth of shares at a price of HK$1.46 each. So it’s clear an insider wanted to buy, at around the current price, which is HK$1.46. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it’s a good sign on balance, but keep in mind they may no longer see value. The good news for Dawnrays Pharmaceutical (Holdings) share holders is that insiders were buying at near the current price.
While Dawnrays Pharmaceutical (Holdings) insiders bought shares last year, they didn’t sell. You can see a visual depiction of insider transactions (by 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Dawnrays Pharmaceutical (Holdings) Insiders Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Dawnrays Pharmaceutical (Holdings). Specifically, Co-Founder & Chairman Kei Li bought CN¥664k worth of shares in that time, and we didn’t record any sales whatsoever. This could be interpreted as suggesting a positive outlook.
Does Dawnrays Pharmaceutical (Holdings) Boast High 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. Insiders own 13% of Dawnrays Pharmaceutical (Holdings) shares, worth about HK$285m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Dawnrays Pharmaceutical (Holdings) Tell Us?
It’s certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Dawnrays Pharmaceutical (Holdings). Nice! Along with insider transactions, I recommend checking if Dawnrays Pharmaceutical (Holdings) is growing revenue. This free chart of historic revenue and earnings should make that easy.
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, but not derivative transactions.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.