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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell S.A.S. Dragon Holdings Limited (HKG:1184), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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.
Check out our latest analysis for S.A.S. Dragon Holdings
S.A.S. Dragon Holdings Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Founder Yuk-Lun Yim bought HK$4.6m worth of shares at a price of HK$2.32 per share. That means that an insider was happy to buy shares at around the current price of HK$2.44. Of course they may have changed their mind. But this suggests they are optimistic. 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. In this case we're pleased to report that the insider bought shares at close to current prices. The only individual insider to buy over the last year was Yuk-Lun Yim.
Yuk-Lun Yim bought 11526000 shares over the last 12 months at an average price of HK$2.37. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
S.A.S. Dragon Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Does S.A.S. Dragon Holdings Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. S.A.S. Dragon Holdings insiders own about HK$779m worth of shares (which is 51% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.