In This Article:
Want to participate in a short research study? Help shape the future of investing tools and receive a $20 prize!
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 Arts Optical International Holdings Limited (HKG:1120).
What Is Insider Buying?
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 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 Arts Optical International Holdings
Arts Optical International Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Founder & Executive Chairman Hoi Ng for HK$5.0m worth of shares, at about HK$1.92 per share. So it’s clear an insider wanted to buy, even at a higher price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. It’s not at all bad to see insiders buy shares at or above current prices. Hoi Ng was the only individual insider to buy over the year.
You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Arts Optical 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.
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Arts Optical International Holdings insiders own 57% of the company, currently worth about HK$422m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.