Yum China Holdings Insiders Sold US$2.3m Of Shares Suggesting Hesitancy

The fact that multiple Yum China Holdings, Inc. (NYSE:YUMC) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, if numerous insiders are selling, shareholders should investigate more.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

The Last 12 Months Of Insider Transactions At Yum China Holdings

Over the last year, we can see that the biggest insider sale was by the CEO & Executive Director, Joey Wat, for US$1.9m worth of shares, at about US$49.71 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$52.26. 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. It is worth noting that this sale was only 5.4% of Joey Wat's holding.

Over the last year, we can see that insiders have bought 18.40k shares worth US$620k. On the other hand they divested 46.15k shares, for US$2.3m. Over the last year we saw more insider selling of Yum China Holdings shares, than buying. 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!

See our latest analysis for Yum China Holdings

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Insiders At Yum China Holdings Have Sold Stock Recently

The last three months saw significant insider selling at Yum China Holdings. Specifically, insiders ditched US$2.2m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership Of Yum China Holdings

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Yum China Holdings insiders own about US$79m worth of shares. That equates to 0.4% 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.

What Might The Insider Transactions At Yum China Holdings Tell Us?

Insiders sold Yum China Holdings shares recently, but they didn't buy any. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that Yum China Holdings is growing earnings. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Yum China Holdings. In terms of investment risks, we've identified 2 warning signs with Yum China Holdings and understanding these should be part of your investment process.

Of course Yum China Holdings 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 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.