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 we'll take a look at whether insiders have been buying or selling shares in World-Link Logistics (Asia) Holding Limited (HKG:6083).
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, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. 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'.
World-Link Logistics (Asia) Holding Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Executive Director Kam Hung Lee bought HK$6.9m worth of shares at a price of HK$0.51 per share. So it's clear an insider wanted to buy, at around the current price, which is HK$0.52. 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. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the World-Link Logistics (Asia) Holding insiders decided to buy shares at close to current prices.
Over the last year, we can see that insiders have bought 24.10m shares worth HK$14m. But they sold 13508000 for HK$6.9m. In the last twelve months there was more buying than selling by World-Link Logistics (Asia) Holding insiders. They paid about HK$0.58 on average. I'd consider this a positive as it suggests insiders see value at around the current price. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insider Ownership of World-Link Logistics (Asia) Holding
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. World-Link Logistics (Asia) Holding insiders own 65% of the company, currently worth about HK$176m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The World-Link Logistics (Asia) Holding Insider Transactions Indicate?
We can't make any useful conclusions about recent trading, since insider buying and selling has been balanced. But insiders have shown more of an appetite for the stock, over the last year. Judging from their transactions, and high insider ownership, World-Link Logistics (Asia) Holding insiders feel good about the company's future. Along with insider transactions, I recommend checking if World-Link Logistics (Asia) Holding is growing revenue. This free chart of historic revenue and earnings should make that easy.
But note: World-Link Logistics (Asia) Holding 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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