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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Hopson Development Holdings Limited (HKG:754).
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, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. 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 Hopson Development Holdings
Hopson Development Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Deputy Chairman of the Board Kut Chu for HK$6.0m worth of shares, at about HK$6.00 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of HK$8.09. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
Kut Chu bought 2.0m shares over the last 12 months at an average price of HK$5.92. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
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. Hopson Development Holdings insiders own about HK$13b worth of shares (which is 75% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Do The Hopson Development Holdings Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Hopson Development Holdings shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, Hopson Development Holdings insiders feel good about the company's future. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .