We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Leyou Technologies Holdings Limited (HKG:1089), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. 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'.
Leyou Technologies Holdings Insider Transactions Over The Last Year
The insider, Kwok Cheung Yuk, made the biggest insider sale in the last 12 months. That single transaction was for HK$732m worth of shares at a price of HK$3.00 each. That means that an insider was selling shares at around the current price of HK$2.61. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign. Kwok Cheung Yuk was the only individual insider to sell shares in the last twelve months. Notably Kwok Cheung Yuk was also the biggest buyer, having purchased HK$143m worth of shares.
Over the last year, we can see that insiders have bought 66615000 shares worth HK$143m. But they sold 244095000 for HK$732m. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Leyou Technologies Holdings better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insider Ownership of Leyou Technologies Holdings
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Leyou Technologies Holdings insiders own 52% of the company, worth about HK$4.2b. 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 Leyou Technologies Holdings Insider Transactions Indicate?
The fact that there have been no Leyou Technologies Holdings insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Leyou Technologies Holdings, we can't say the same about the selling of shares. Along with insider transactions, I recommend checking if Leyou Technologies Holdings is growing revenue. This free chart of historic revenue and earnings should make that easy.
But note: Leyou Technologies Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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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