Centenary United Holdings Insider Sellers Vindicated After 12% Drop

Insiders seem to have made the most of their holdings by selling CN¥1.1m worth of Centenary United Holdings Limited (HKG:1959) stock at an average sell price of CN¥0.71 during the past year. After the stock price dropped 12% last week, the company's market value declined by HK$207m, 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.

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The Last 12 Months Of Insider Transactions At Centenary United Holdings

In the last twelve months, the biggest single sale by an insider was when the VP of Operation & Executive Director, Huaquan Chen, sold HK$1.1m worth of shares at a price of HK$0.71 per share. That means that an insider was selling shares at slightly below the current price (HK$3.00). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was 83% of Huaquan Chen's holding. The only individual insider seller over the last year was Huaquan Chen.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

Check out our latest analysis for Centenary United Holdings

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Insiders At Centenary United Holdings Have Sold Stock Recently

The last three months saw significant insider selling at Centenary United Holdings. In total, VP of Operation & Executive Director Huaquan Chen dumped HK$1.1m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership Of Centenary United Holdings

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Centenary United Holdings insiders own about HK$1.1b worth of shares (which is 72% of the company). 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 Does This Data Suggest About Centenary United Holdings Insiders?

An insider hasn't bought Centenary United Holdings stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. 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 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. For instance, we've identified 3 warning signs for Centenary United Holdings (2 can't be ignored) you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 of direct interests only, but not derivative transactions or indirect interests.

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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.