As Landsea Green Properties Co., Ltd. (HKG:106) drops to HK$1.8b market cap, insiders might rethink their CN¥6.4m stock purchase earlier this year

By
Simply Wall St
Published
December 02, 2021
SEHK:106
Source: Shutterstock

Insiders who acquired CN¥6.4m worth of Landsea Green Properties Co., Ltd.'s (HKG:106) stock at an average price of CN¥0.43 in the past 12 months may be dismayed by the recent 11% price decline. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only CN¥5.7m.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Landsea Green Properties

The Last 12 Months Of Insider Transactions At Landsea Green Properties

The Executive Chairman Ming Tian made the biggest insider purchase in the last 12 months. That single transaction was for HK$2.4m worth of shares at a price of HK$0.41 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.38). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Ming Tian was the only individual insider to buy during the last year.

Ming Tian bought 15.02m shares over the last 12 months at an average price of HK$0.43. 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:106 Insider Trading Volume December 2nd 2021

Landsea Green Properties is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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. Insiders own 15% of Landsea Green Properties shares, worth about HK$273m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Landsea Green Properties Insider Transactions Indicate?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Landsea Green Properties. Looks promising! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 4 warning signs we've spotted with Landsea Green Properties (including 2 which make us uncomfortable).

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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