Don't Ignore The Insider Selling In China Sandi Holdings

We wouldn't blame China Sandi Holdings Limited (HKG:910) shareholders if they were a little worried about the fact that Jiadi Guo, the Executive Chairman recently netted about HK$16m selling shares at an average price of HK$0.032. That sale reduced their total holding by 14% which is hardly insignificant, but far from the worst we've seen.

Check out our latest analysis for China Sandi Holdings

China Sandi Holdings Insider Transactions Over The Last Year

In fact, the recent sale by Jiadi Guo was the biggest sale of China Sandi 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$0.039, 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 14% of Jiadi Guo's stake.

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!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Does China Sandi 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that China Sandi Holdings insiders own 67% of the company, worth about HK$132m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The China Sandi Holdings Insider Transactions Indicate?

An insider sold China Sandi Holdings shares recently, but they didn't buy any. 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. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that China Sandi Holdings is showing 4 warning signs in our investment analysis, and 3 of those are significant...

But note: China Sandi Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.