It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Xinyi Solar Holdings Limited (HKG:968).
What Is Insider Buying?
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, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. 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.’
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Xinyi Solar Holdings Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Chief Executive Officer and Executive Director Yau Ching Lee bought HK$17m worth of shares at a price of HK$2.47 per share. So it’s clear an insider wanted to buy, at around the current price. 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. Nonetheless, we consider it positive if insiders want to buy at around the current share price.
Happily, we note that in the last year insiders bought 44.03m shares for a total of HK$115m. In total, Xinyi Solar Holdings insiders bought more than they sold over the last year. The average buy price was around HK$2.61. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (HK$3.05). You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
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Many investors like to check how much of a company is owned by insiders. 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 great to see that Xinyi Solar Holdings insiders own 33% of the company, worth about HK$6.9b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Xinyi Solar Holdings Insider Transactions Indicate?
The fact that there have been no Xinyi Solar Holdings insider transactions recently certainly doesn’t bother us. But insiders have shown more of an appetite for the stock, over the last year. With high insider ownership and encouraging transactions, it seems like Xinyi Solar Holdings insiders think the business has merit. Of course, the future is what matters most. So if you are interested in Xinyi Solar Holdings, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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 email@example.com.