It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Macau Legend Development Limited (HKG:1680), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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 would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Macau Legend Development Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Co-Chairman & CEO, Kam Chow, for HK$370m worth of shares, at about HK$1.38 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is HK$1.03. So it may not tell us anything about how insiders feel about the current share price. Kam Chow was the only individual insider to sell over the last year. Notably Kam Chow was also the biggest buyer, having purchased HK$78m worth of shares.
Happily, we note that in the last year insiders paid HK$78m for 59.0m shares. On the other hand they divested 268.0m shares, for HK$370m. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at Macau Legend Development Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at Macau Legend Development. We can see that Kam Chow paid HK$1.2m for shares in the company. No-one sold. This is a positive in our book as it implies some confidence.
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. Macau Legend Development insiders own 44% of the company, currently worth about HK$2.9b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Macau Legend Development Tell Us?
It is good to see the recent insider purchase. But we can't say the same for the transactions over the last 12 months. The recent buying by an insider, along with high insider ownership, suggest that Macau Legend Development insiders are fairly aligned, and optimistic. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .
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, but not derivative transactions.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.