We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Lippo Malls Indonesia Retail Trust (SGX:D5IU).
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
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. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
Lippo Malls Indonesia Retail Trust Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the insider, Jinquan Tong, for S$540k worth of shares, at about S$0.11 per share. That means that an insider was selling shares at slightly below the current price (S$0.11). 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. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 3.3% of Jinquan Tong's stake. Jinquan Tong was the only individual insider to sell over the last year.
Jinquan Tong divested 10.00m shares over the last 12 months at an average price of S$0.11. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insider Ownership of Lippo Malls Indonesia Retail Trust
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Lippo Malls Indonesia Retail Trust insiders own about S$21m worth of shares. That equates to 6.3% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Lippo Malls Indonesia Retail Trust Insiders?
The fact that there have been no Lippo Malls Indonesia Retail Trust insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by Lippo Malls Indonesia Retail Trust insiders. But we do like the fact that insiders own a fair chunk of the company. 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 Lippo Malls Indonesia Retail Trust is showing 3 warning signs in our investment analysis, and 1 of those can't be ignored...
Of course Lippo Malls Indonesia Retail Trust 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, but not derivative transactions.
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This article by Simply Wall St is general in nature. 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.
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