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We often see insiders buying up shares in companies that perform well over the long term. 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 Tenfu (Cayman) Holdings Company Limited (HKG:6868).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
See our latest analysis for Tenfu (Cayman) Holdings
The Last 12 Months Of Insider Transactions At Tenfu (Cayman) Holdings
In the last twelve months, the biggest single purchase by an insider was when Co-Founder Chia Lee bought HK$47m worth of shares at a price of HK$5.30 per share. That implies that an insider found the current price of HK$5.55 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. The good news for Tenfu (Cayman) Holdings share holders is that an insider was buying at near the current price. The only individual insider to buy over the last year was Chia Lee.
Chia Lee purchased 14138000 shares over the year. The average price per share was HK$5.30. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Tenfu (Cayman) Holdings insiders own about HK$3.5b worth of shares (which is 57% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.