We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Hong Fok Corporation Limited (SGX:H30).
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 on the market. 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. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Hong Fok
In the last twelve months, the biggest single purchase by an insider was when Joint Chairman & Joint MD Sim Eng Cheong bought S$3.7m worth of shares at a price of S$0.75 per share. That means that even when the share price was higher, an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. We generally consider it a positive if insiders have been buying on market, even above the current price.
In the last twelve months insiders paid S$4.2m for 5.65m shares purchased. In the last twelve months there was more buying than selling by Hong Fok insiders. The average buy price was around S$0.75. I’d consider this a positive as it suggests insiders see value at around the current price, which is S$0.70. You can see a visual depiction of insider transactions over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Hong Fok is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Hong Fok Have Bought Stock Recently
It’s good to see that Hong Fok insiders have made notable investments in the company’s shares. In total, insiders bought S$4.2m worth of shares in that time, and we didn’t record any sales whatsoever. That shows some optimism about the company’s future.
Insider Ownership of Hong Fok
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. It’s good to see that Hong Fok insiders own 39% of the company, worth about S$134m. This level of insider ownership is good but just short of being particularly stand-out, but it certainly does suggest a reasonable degree of alignment.
So What Do The Hong Fok Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. Insiders likely see value in Hong Fok shares, given these transactions (along with notable insider ownership of the company). To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.