Should You Take Comfort From Insider Transactions At Lerthai Group Limited (HKG:112)?

We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 we’ll take a look at whether insiders have been buying or selling shares in Lerthai Group Limited (HKG:112).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’

Check out our latest analysis for Lerthai Group

Lerthai Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Vice Chairlady & Co-Chief Executive Officer Yan Zhang bought HK$5.0m worth of shares at a price of HK$7.08 per share. That means that an insider was happy to buy shares at around the current price. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. Nonetheless, we consider it positive if insiders want to buy at around the current share price. The only individual insider to buy over the last year was Yan Zhang.

Yan Zhang bought a total of 1.63m shares over the year at an average price of HK$7.04. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

SEHK:112 Recent Insider Trading, March 29th 2019
SEHK:112 Recent Insider Trading, March 29th 2019

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.

Does Lerthai Group Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Lerthai Group insiders own about HK$3.1b worth of shares (which is 61% of the company). 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 Lerthai Group Insider Transactions Indicate?

The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Lerthai Group. Nice! Along with insider transactions, I recommend checking if Lerthai Group is growing revenue. This free chart of historic revenue and earnings should make that easy.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.