We often see insiders buying up shares in companies that perform well over the long term. 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 Jiayuan International Group Limited (HKG:2768), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.
Jiayuan International Group Insider Transactions Over The Last Year
Chairman of the Board Tin Ching Shum made the biggest insider purchase in the last 12 months. That single transaction was for HK$4.8b worth of shares at a price of HK$3.51 each. That means that an insider was happy to buy shares at above the current price of HK$3.17. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. To us, it’s very important to consider the price insiders pay for shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Tin Ching Shum was the only individual insider to buy over the year.
The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Jiayuan International Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Jiayuan International Group Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Jiayuan International Group insiders own 57% of the company, currently worth about HK$6.9b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Jiayuan International Group Insider Transactions Indicate?
The fact that there have been no Jiayuan International Group insider transactions recently certainly doesn’t bother us. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, Jiayuan International Group insiders feel good about the company’s future. So while it’s helpful to know what insiders are doing in terms of buying or selling, it’s also helpful to know the risks that a particular company is facing. To help with this, we’ve discovered 3 warning signs (1 can’t be ignored!) that you ought to be aware of before buying any shares in Jiayuan International Group.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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