We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Longfor Group Holdings Limited (HKG:960), 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 Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
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Longfor Group Holdings Insider Transactions Over The Last Year
Chairperson of the Board Yajun Wu made the biggest insider purchase in the last 12 months. That single transaction was for HK$200m worth of shares at a price of HK$22.70 each. So it’s clear an insider wanted to buy, 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. In any event it’s generally a positive if insiders are buying shares at around the current price.
In the last twelve months insiders purchased 37.93m shares for HK$841m. But insiders sold 981.50k shares worth HK$21m. In total, Longfor Group Holdings insiders bought more than they sold over the last year. The average buy price was around HK$22.17. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price of HK$22.90. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Longfor Group Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Longfor Group Holdings Insiders Bought Stock Recently
Over the last three months, we’ve seen significantly more insider buying, than insider selling, at Longfor Group Holdings. Yajun Wu spent CN¥200m on stock. But we did see Independent Non-Executive Director Frederick Churchouse sell shares worth CN¥3.4m. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Longfor Group Holdings insiders own 50% of the company, worth about HK$68b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At Longfor Group Holdings Tell Us?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Longfor Group Holdings. Nice! Of course, the future is what matters most. So if you are interested in Longfor Group Holdings, you should check out this free report on analyst forecasts for the company.
But note: Longfor Group Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.