Beijing Enterprises Water Group Insiders Made A Wise Decision By Selling CN¥46m Worth Of Stock

While Beijing Enterprises Water Group Limited (HKG:371) shareholders have had a good week with the stock up 11%, they shouldn't let their guards down. The fact that insiders chose to dispose of CN¥46m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Beijing Enterprises Water Group

The Last 12 Months Of Insider Transactions At Beijing Enterprises Water Group

In the last twelve months, the biggest single sale by an insider was when the VP & Executive Director, Haifeng Li, sold HK$36m worth of shares at a price of HK$1.80 per share. That means that even when the share price was below the current price of HK$2.68, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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. It is worth noting that this sale was 89% of Haifeng Li's holding.

In the last year Beijing Enterprises Water Group insiders didn't buy any company stock. 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!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Does Beijing Enterprises Water Group Boast High Insider Ownership?

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. Beijing Enterprises Water Group insiders own 3.7% of the company, currently worth about HK$996m based on the recent share price. 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 Beijing Enterprises Water Group Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Beijing Enterprises Water Group shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Beijing Enterprises Water Group insiders selling. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Every company has risks, and we've spotted 2 warning signs for Beijing Enterprises Water Group you should know about.

Of course Beijing Enterprises Water Group 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 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.