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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 shareholders might well want to know whether insiders have been buying or selling shares in Yuanda China Holdings Limited (HKG:2789).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. 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 Yuanda China Holdings
Yuanda China Holdings Insider Transactions Over The Last Year
Founder & Chairman Baohua Kang made the biggest insider purchase in the last 12 months. That single transaction was for HK$561k worth of shares at a price of HK$0.085 each. That means that an insider was happy to buy shares at around the current price of HK$0.098. Of course they may have changed their mind. But this suggests they are optimistic. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Yuanda China Holdings share holders is that an insider was buying at near the current price. The only individual insider to buy over the last year was Baohua Kang.
Baohua Kang purchased 76.0m shares over the year. The average price per share was HK$0.093. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Does Yuanda China 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Yuanda China Holdings insiders own 58% of the company, worth about HK$355m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.