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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in SITC International Holdings Company Limited (HKG:1308).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.
See our latest analysis for SITC International Holdings
SITC International Holdings Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Independent Non-Executive Director, Kwok Yeung, sold HK$2.8m worth of shares at a price of HK$5.65 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of HK$7.80. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was 83% of Kwok Yeung's stake. Kwok Yeung was the only individual insider to sell over the last year.
Kwok Yeung divested 600000 shares over the last 12 months at an average price of US$5.74. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like SITC International 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.
Does SITC International Holdings Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that SITC International Holdings insiders own 1.7% of the company, worth about HK$361m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.