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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 Smart-Core Holdings Limited (HKG:2166), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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 equally, we would consider it foolish to ignore insider transactions altogether. 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.’
The Last 12 Months Of Insider Transactions At Smart-Core Holdings
In the last twelve months, the biggest single sale by an insider was when the CFO & Executive Director, Tsz Leung Wong, sold HK$35m worth of shares at a price of HK$1.55 per share. That means that an insider was selling shares at around the current price of HK$1.48. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. In this case, the big sale took place at around the current price, so it’s not too bad (but it’s still not a positive). Tsz Leung Wong was the only individual insider to sell shares in the last twelve months.
The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Does Smart-Core Holdings Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Smart-Core Holdings insiders own about HK$520m worth of shares (which is 70% 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 Do The Smart-Core Holdings Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded Smart-Core Holdings shares in the last quarter. While we feel good about high insider ownership of Smart-Core Holdings, we can’t say the same about the selling of shares. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .
But note: Smart-Core 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.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.