This Insider Has Just Sold Shares In Lenovo Group

Some Lenovo Group Limited (HKG:992) shareholders may be a little concerned to see that the Non-Executive Director, Wai Ming Wong, recently sold a substantial HK$27m worth of stock at a price of HK$11.26 per share. However, that sale only accounted for 3.7% of their holding, so arguably it doesn't say much about their conviction.

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The Last 12 Months Of Insider Transactions At Lenovo Group

In fact, the recent sale by Wai Ming Wong was the biggest sale of Lenovo Group shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at slightly below the current price (HK$11.95). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 3.7% of Wai Ming Wong's stake.

Happily, we note that in the last year insiders paid HK$8.0m for 741.49k shares. But they sold 4.65m shares for HK$53m. Wai Ming Wong divested 4.65m shares over the last 12 months at an average price of US$11.44. 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!

See our latest analysis for Lenovo Group

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Insider Ownership Of Lenovo Group

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. It's great to see that Lenovo Group insiders own 6.8% of the company, worth about HK$10b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Lenovo Group Insider Transactions Indicate?

The stark truth for Lenovo Group is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But since Lenovo Group is profitable and growing, we're not too worried by this. 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. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Lenovo Group. Every company has risks, and we've spotted 2 warning signs for Lenovo Group you should know about.

But note: Lenovo Group 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 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.