Insiders At Yum China Holdings Sold US$2.3m In Stock, Alluding To Potential Weakness

Many Yum China Holdings, Inc. (NYSE:YUMC) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

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.

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Yum China Holdings Insider Transactions Over The Last Year

The CEO & Executive Director, Joey Wat, made the biggest insider sale in the last 12 months. That single transaction was for US$1.9m worth of shares at a price of US$49.71 each. That means that an insider was selling shares at around the current price of US$45.68. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.

In the last twelve months insiders purchased 18.40k shares for US$620k. But insiders sold 46.15k shares worth US$2.3m. All up, insiders sold more shares in Yum China Holdings than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) 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!

See our latest analysis for Yum China Holdings

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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. It appears that Yum China Holdings insiders own 0.4% of the company, worth about US$68m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Yum China Holdings Insider Transactions Indicate?

The fact that there have been no Yum China Holdings insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by Yum China Holdings insiders. But we do like the fact that insiders own a fair chunk of the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Yum China Holdings. For example - Yum China Holdings has 1 warning sign we think you should be aware of.

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.