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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 shareholders might well want to know whether insiders have been buying or selling shares in Herald Holdings Limited (HKG:114).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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 it is perfectly logical to keep tabs on what insiders are doing. 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’.
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The Last 12 Months Of Insider Transactions At Herald Holdings
In the last twelve months, the biggest single purchase by an insider was when Executive Director Tsang-Kay Cheung bought HK$421k worth of shares at a price of HK$1.14 per share. So it’s clear an insider wanted to buy, even at a higher price. Their view may have changed since then, but at least it shows they felt optimistic at the time. We generally consider it a positive if insiders have been buying on market, even above the current price. Tsang-Kay Cheung was the only individual insider to buy shares in the last twelve months.
Tsang-Kay Cheung bought 1.20m shares over the last 12 months at an average price of HK$1.00. 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!
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Does Herald Holdings Boast High 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. It’s great to see that Herald Holdings insiders own 47% of the company, worth about HK$203m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.