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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. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in EcoGreen International Group Limited (HKG:2341).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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'.
See our latest analysis for EcoGreen International Group
The Last 12 Months Of Insider Transactions At EcoGreen International Group
In the last twelve months, the biggest single purchase by an insider was when Founder Yirong Yang bought HK$3.3m worth of shares at a price of HK$1.64 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$1.54). Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing 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. Yirong Yang was the only individual insider to buy shares in the last twelve months.
Yirong Yang bought 15.4m shares over the last 12 months at an average price of HK$1.64. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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 of EcoGreen International Group
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's great to see that EcoGreen International Group insiders own 50% of the company, worth about HK$605m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.