Jiayuan International Group Limited (HKG:2768) insiders who sold CN¥407m worth of stock earlier this year are probably glad they did so as market cap slides to HK$935m

By selling CN¥407m worth of Jiayuan International Group Limited (HKG:2768) stock at an average sell price of CN¥0.33 over the last year, insiders seemed to have made the most of their holdings. After the stock price dropped 15% last week, the company's market value declined by HK$171m, but insiders were able to mitigate their losses.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Our analysis indicates that 2768 is potentially undervalued!

The Last 12 Months Of Insider Transactions At Jiayuan International Group

In the last twelve months, the biggest single sale by an insider was when the Non-Executive Chairman of the Board, Tin Ching Shum, sold HK$75m worth of shares at a price of HK$0.41 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of HK$0.14. So it may not shed much light on insider confidence at current levels. The only individual insider seller over the last year was Tin Ching Shum. Notably Tin Ching Shum was also the biggest buyer, having purchased HK$41m worth of shares.

Tin Ching Shum sold a total of 1.23b shares over the year at an average price of CN¥0.33. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Jiayuan International Group Insiders Are Selling The Stock

The last three months saw significant insider selling at Jiayuan International Group. In total, Non-Executive Chairman of the Board Tin Ching Shum sold HK$62m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Does Jiayuan International Group Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Jiayuan International Group insiders own 42% of the company, worth about HK$392m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Jiayuan International Group Insiders?

An insider sold stock recently, but they haven't been buying. Zooming out, the longer term picture doesn't give us much comfort. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, Jiayuan International Group has 4 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

Of course Jiayuan International Group may not be the best stock to buy. So you may wish to see this free collection of high quality 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. 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.