Lenovo Group Insiders Sell US$200m Of Stock, Possibly Signalling Caution

In the last year, many Lenovo Group Limited (HKG:992) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

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.

See our latest analysis for Lenovo Group

The Last 12 Months Of Insider Transactions At Lenovo Group

Over the last year, we can see that the biggest insider sale was by the Chairman & CEO, Yuanqing Yang, for HK$83m worth of shares, at about HK$9.67 per share. So what is clear is that an insider saw fit to sell at around the current price of HK$9.23. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. 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).

In the last twelve months insiders purchased 308.60k shares for HK$3.1m. But insiders sold 20.74m shares worth HK$200m. All up, insiders sold more shares in Lenovo Group than they bought, over the last year. 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!

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Lenovo Group Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Lenovo Group. Overall, four insiders shelled out HK$2.2m for shares in the company -- and none sold. This is a positive in our book as it implies some confidence.

Insider Ownership Of Lenovo Group

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Lenovo Group insiders own 6.0% of the company, currently worth about HK$6.9b based on the recent share price. 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 Do The Lenovo Group Insider Transactions Indicate?

The recent insider purchases are heartening. However, the longer term transactions are not so encouraging. The recent buying by some insiders , along with high insider ownership, suggest that Lenovo Group 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. Case in point: We've spotted 1 warning sign for Lenovo Group you should be aware of.

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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.