Stock Analysis

Did Pentamaster International Limited (HKG:1665) Insiders Sell Shares?

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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 we'll take a look at whether insiders have been buying or selling shares in Pentamaster International Limited (HKG:1665).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

Check out our latest analysis for Pentamaster International

The Last 12 Months Of Insider Transactions At Pentamaster International

In the last twelve months, the biggest single sale by an insider was when the Non-Executive Director, Kean Yong Leng, sold HK$1.2m worth of shares at a price of HK$1.91 per share. That means that even when the share price was below the current price of HK$2.05, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 68% of Kean Yong Leng's holding. The only individual insider seller over the last year was Kean Yong Leng. Notably Kean Yong Leng was also the biggest buyer, having purchased HK$1.8m worth of shares.

Kean Yong Leng sold a total of 2.09m shares over the year at an average price of RM1.84. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

SEHK:1665 Insider Trading Volume February 21st 2021

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).

Insider Ownership of Pentamaster International

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Our data indicates that Pentamaster International insiders own about HK$47m worth of shares (which is 1.4% of the company). Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Does This Data Suggest About Pentamaster International Insiders?

The fact that there have been no Pentamaster International insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by Pentamaster International insiders. The modest level of insider ownership is, at least, some comfort. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. You'd be interested to know, that we found 1 warning sign for Pentamaster International and we suggest you have a look.

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.

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