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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Le Saunda Holdings Limited (HKG:738), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. 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 Le Saunda Holdings
Le Saunda Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Founder & Non-Executive Director Tze Lee for HK$509k worth of shares, at about HK$0.86 per share. That implies that an insider found the current price of HK$0.89 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. Happily, the Le Saunda Holdings insider decided to buy shares at close to current prices. Tze Lee was the only individual insider to buy shares in the last twelve months.
Tze Lee bought 2.0m shares over the last 12 months at an average price of HK$0.91. You can see the insider transactions (by individuals) over the last year depicted in the chart below. 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
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. Le Saunda Holdings insiders own about HK$308m worth of shares (which is 47% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.