Shareholders May Not Overlook Pangaea Connectivity Technology Insiders Selling HK$42m In Stock

Last week, Pangaea Connectivity Technology Limited's (HKG:1473) stock jumped 10%, but insiders who sold HK$42m worth of stock in over the past year are likely to be in a better position. Holding on to stock would have meant their investment would be worth less now than it was at the time of sale. Thus selling at an average price of HK$0.25, which is higher than the current price, may have been the best decision.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Pangaea Connectivity Technology

Pangaea Connectivity Technology Insider Transactions Over The Last Year

The insider Ka Ho Poon made the biggest insider purchase in the last 12 months. That single transaction was for HK$25m worth of shares at a price of HK$0.25 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.22). 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. We always take careful note of the price insiders pay when purchasing 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. The only individual insider to buy over the last year was Ka Ho Poon.

Over the last year we saw more insider selling of Pangaea Connectivity Technology shares, than buying. 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!

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Insiders At Pangaea Connectivity Technology Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Pangaea Connectivity Technology. In total, insider Ka Ho Poon dumped HK$17m 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

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Pangaea Connectivity Technology insiders own about HK$149m worth of shares (which is 70% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Pangaea Connectivity Technology Insiders?

An insider sold Pangaea Connectivity Technology shares recently, but they didn't buy any. Despite some insider buying, the longer term picture doesn't make us feel much more positive. 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. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example, Pangaea Connectivity Technology has 4 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

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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.