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We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell China Putian Food Holding Limited (HKG:1699), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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 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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
Check out our latest analysis for China Putian Food Holding
The Last 12 Months Of Insider Transactions At China Putian Food Holding
In the last twelve months, the biggest single purchase by an insider was when Chairman & CEO Chenyang Cai bought HK$27m worth of shares at a price of HK$0.14 per share. Even though the purchase was made at a significantly lower price than the recent price (HK$0.38), we still think insider buying is a positive. But because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
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!
China Putian Food Holding is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does China Putian Food Holding Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. China Putian Food Holding insiders own about HK$79m worth of shares. That equates to 11% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About China Putian Food Holding Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in China Putian Food Holding and we see no evidence to suggest they are worried about the future. Along with insider transactions, I recommend checking if China Putian Food Holding is growing revenue. This free chart of historic revenue and earnings should make that easy.