Although Major Holdings Limited (HKG: 1389) Shares gained 14% last week, insiders who sold HK $ 9.2million of shares in the past year are likely better off. Selling at an average price of HK $ 0.043, which is higher than the current price, may have been the best decision for these insiders as their investment would have been worth less now than when it was sold.
While we never suggest that investors base their decisions solely on what a company’s directors have done, we think it makes perfect sense to keep tabs on what insiders are doing.
See our latest analysis for Major Holdings
Insider trading of significant holdings in the past year
CEO and Chairman Chun To Cheung made the biggest insider buy in the past 12 months. This single transaction involved shares valued at HK $ 7.2 million priced at HK $ 0.044 each. This means that an insider was happy to buy shares above the current price of HK $ 0.041. It is very possible that they regret the purchase, but it is more likely that they are optimistic about the business. For us, it’s very important to consider the price insiders pay for stocks. It is encouraging to see an insider paid above the current price of the shares, as it suggests that he has seen value, even at higher levels. The only individual insider to buy in the past year was Chun To Cheung.
The chart below shows insider trading (by companies and individuals) over the past year. By clicking on the graph below, you can see the exact detail of each insider trade!
For those who like to find winning investments this free list of growing companies with recent insider buys, might be just the ticket.
Insider ownership of significant holdings
I like to look at how many shares insiders own in a company, to help inform my perspective on their alignment with insiders. Strong insider ownership often makes company management more concerned with the interests of shareholders. It’s great to see that Major Holdings insiders own 73% of the company, worth around HK $ 100million. I like to see this level of insider ownership because it increases the chances that management is thinking in the best interests of shareholders.
So what does this data suggest about the insiders of the major holding companies?
We cannot draw any useful conclusions about recent transactions as insider buying and selling has been balanced. As we gain confidence from the high insider ownership of Major Holdings, we cannot say the same for their trades over the past year, with no further purchases. While we love to know what’s going on with insider ownership and trading, we also make sure to consider the risks a stock faces before making any investment decisions. For example, we have identified 3 warning signs for Major Holdings (1 is not doing too well with us) you should be aware of.
But beware : Major Holdings may not be the best stock to buy. So take a look at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those persons who report their transactions to the relevant regulatory body. We currently account for open market transactions and private assignments, but not derivative transactions.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St does not have any position in the mentioned stocks.
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