We often see insiders buying up shares in companies that perform well over the long term. 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 Yin He Holdings Limited (HKG:8260).
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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. 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'.
View our latest analysis for Yin He Holdings
The Last 12 Months Of Insider Transactions At Yin He Holdings
Over the last year, we can see that the biggest insider purchase was by insider Liyi Chen for HK$28m worth of shares, at about HK$0.31 per share. That means that an insider was happy to buy shares at above the current price of HK$0.25. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. The only individual insider to buy over the last year was Liyi Chen.
You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Yin He Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Yin He Holdings Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Yin He Holdings insiders own 31% of the company, worth about HK$126m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Yin He Holdings Tell Us?
It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Yin He Holdings. One for the watchlist, at least! Along with insider transactions, I recommend checking if Yin He Holdings is growing revenue. This free chart of historic revenue and earnings should make that easy.