Kingboard Holdings Limited (HKG:148) shareholders (or potential shareholders) will be happy to see that the Co-Founder & Executive Chairman, Kwok Wing Cheung, recently bought a whopping HK$5.4m worth of stock, at a price of HK$26.79. There's no denying a buy of that magnitude suggests conviction in a brighter future, although we do note that proportionally it only increased their holding by 2.3%.
Kingboard Holdings Insider Transactions Over The Last Year
In fact, the recent purchase by Co-Founder & Executive Chairman Kwok Wing Cheung was not their only trade of Kingboard Holdings shares this year. Earlier in the year, they sold shares at a price ofHK$23.40 per share in a -HK$59m transaction. So it's clear an insider wanted to take some cash off the table, even below the current price of HK$27.85. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 29% of Kwok Wing Cheung's stake.
Happily, we note that in the last year insiders paid HK$62m for 3.15m shares. But they sold 13.81m shares for HK$319m. All up, insiders sold more shares in Kingboard Holdings than they bought, over the last year. The average sell price was around HK$23.11. It's not too encouraging to see that insiders have sold at below the current price. Of course, the sales could be motivated for a multitude of reasons, so we shouldn't jump to conclusions. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Kingboard Holdings insiders own about HK$850m worth of shares (which is 2.8% 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.
What Might The Insider Transactions At Kingboard Holdings Tell Us?
The recent insider purchase is heartening. On the other hand the transaction history, over the last year, isn't so positive. The recent buying by an insider , along with high insider ownership, suggest that Kingboard Holdings insiders are fairly aligned, and optimistic. 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 Kingboard Holdings and we suggest you have a look.
Of course Kingboard 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.
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