This Insider Has Just Sold Shares In China Water Affairs Group

We wouldn't blame China Water Affairs Group Limited (HKG:855) shareholders if they were a little worried about the fact that Chuan Liang Duan, the Executive Chairman recently netted about HK$137m selling shares at an average price of HK$5.00. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 5.8%.

View our latest analysis for China Water Affairs Group

The Last 12 Months Of Insider Transactions At China Water Affairs Group

In fact, the recent sale by Chuan Liang Duan was the biggest sale of China Water Affairs Group shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was below the current price of HK$5.48, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower 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. We note that the biggest single sale was only 5.8% of Chuan Liang Duan's holding.

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!

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

Insider Ownership Of China Water Affairs 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. A high insider ownership often makes company leadership more mindful of shareholder interests. China Water Affairs Group insiders own about HK$2.9b worth of shares (which is 33% of the company). 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 Does This Data Suggest About China Water Affairs Group Insiders?

An insider sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. 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. While it's good to be aware of 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. Case in point: We've spotted 2 warning signs for China Water Affairs Group you should be aware of, and 1 of them is a bit concerning.

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 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.