Read This Before Selling Beijing Tong Ren Tang Chinese Medicine Company Limited (HKG:3613) Shares

We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Beijing Tong Ren Tang Chinese Medicine Company Limited (HKG:3613).

What Is Insider Buying?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

See our latest analysis for Beijing Tong Ren Tang Chinese Medicine

The Last 12 Months Of Insider Transactions At Beijing Tong Ren Tang Chinese Medicine

In the last twelve months, the biggest single purchase by an insider was when CEO & Executive Director Huan Ping Zhang bought HK$626k worth of shares at a price of HK$8.35 per share. That implies that an insider found the current price of HK$10.16 per share to be enticing. 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 Beijing Tong Ren Tang Chinese Medicine share holders is that insiders were buying at near the current price.

While Beijing Tong Ren Tang Chinese Medicine insiders bought shares during the last year, they didn't sell. 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!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Based on our data, Beijing Tong Ren Tang Chinese Medicine insiders have about 0.1% of the stock, worth approximately HK$8.0m. But they may have an indirect interest through a corporate structure that we haven't picked up on. We prefer to see high levels of insider ownership.

So What Does This Data Suggest About Beijing Tong Ren Tang Chinese Medicine Insiders?

The fact that there have been no Beijing Tong Ren Tang Chinese Medicine insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. We'd like to see bigger individual holdings. However, we don't see anything to make us think Beijing Tong Ren Tang Chinese Medicine insiders are doubting the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Beijing Tong Ren Tang Chinese Medicine. For example - Beijing Tong Ren Tang Chinese Medicine has 1 warning sign we think you should be aware of.

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.

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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. 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.
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