Should You Take Comfort From Insider Transactions At China Environmental Technology Holdings Limited (HKG:646)?

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 shareholders might well want to know whether insiders have been buying or selling shares in China Environmental Technology Holdings Limited (HKG:646).

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the 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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

View our latest analysis for China Environmental Technology Holdings

China Environmental Technology Holdings Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Chun To Cheung for HK$4.5m worth of shares, at about HK$0.012 per share. Even though the purchase was made at a significantly lower price than the recent price (HK$0.018), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Chun To Cheung bought a total of 425.54m shares over the year at an average price of HK$0.012. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

China Environmental Technology Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership of China Environmental Technology Holdings

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that China Environmental Technology Holdings insiders own 31% of the company, worth about HK$20m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At China Environmental Technology Holdings Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in China Environmental Technology Holdings and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing China Environmental Technology Holdings. Case in point: We've spotted 4 warning signs for China Environmental Technology Holdings you should be aware of, and 3 of these shouldn't be ignored.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.

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