Insiders who placed huge bets on Skyfame Realty (Holdings) Limited (HKG:59) earlier this year would be disappointed with the 13% drop

By
Simply Wall St
Published
April 22, 2022
SEHK:59
Source: Shutterstock

The recent 13% drop in Skyfame Realty (Holdings) Limited's (HKG:59) stock could come as a blow to insiders who purchased CN¥5.9m worth of stock at an average buy price of CN¥0.86 over the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth CN¥3.3m, which is not great.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Skyfame Realty (Holdings)

The Last 12 Months Of Insider Transactions At Skyfame Realty (Holdings)

In the last twelve months, the biggest single purchase by an insider was when Chairman & CEO Pan Yu bought HK$2.3m worth of shares at a price of HK$0.86 per share. That means that an insider was happy to buy shares at above the current price of HK$0.48. 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. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Pan Yu was the only individual insider to buy during the last year.

Pan Yu bought 6.85m shares over the last 12 months at an average price of HK$0.86. The chart below shows insider transactions (by companies and 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!

insider-trading-volume
SEHK:59 Insider Trading Volume April 22nd 2022

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.

Insider Ownership of Skyfame Realty (Holdings)

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Skyfame Realty (Holdings) insiders own about HK$2.8b worth of shares (which is 69% of the company). 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 Skyfame Realty (Holdings) Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, Skyfame Realty (Holdings) 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. Every company has risks, and we've spotted 3 warning signs for Skyfame Realty (Holdings) (of which 1 doesn't sit too well with us!) you should know about.

Of course Skyfame Realty (Holdings) 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.