Wan Leader International Limited (HKG:8482) Insiders Have Been Selling

By
Simply Wall St
Published
June 02, 2021
SEHK:8482
Source: Shutterstock

We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Wan Leader International Limited (HKG:8482), 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, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for Wan Leader International

Wan Leader International Insider Transactions Over The Last Year

The CEO & Executive Chairman, Hak Yu Loy, made the biggest insider sale in the last 12 months. That single transaction was for HK$34m worth of shares at a price of HK$0.24 each. That means that even when the share price was below the current price of HK$0.29, an insider wanted to cash in some shares. 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. 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. We note that the biggest single sale was only 34% of Hak Yu Loy's holding.

In total, Wan Leader International insiders sold more 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. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
SEHK:8482 Insider Trading Volume June 3rd 2021

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insiders at Wan Leader International Have Sold Stock Recently

The last quarter saw substantial insider selling of Wan Leader International shares. In total, insiders dumped HK$1.3m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

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. A high insider ownership often makes company leadership more mindful of shareholder interests. Wan Leader International insiders own 52% of the company, currently worth about HK$126m based on the recent share price. 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 Wan Leader International Insider Transactions Indicate?

Insiders haven't bought Wan Leader International stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn't bring confidence, either. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. While we like knowing 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. Be aware that Wan Leader International is showing 4 warning signs in our investment analysis, and 1 of those is concerning...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, but not derivative transactions.

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