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 CPMC Holdings Limited (HKG:906), you may well want to know whether insiders have been buying or selling.
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 don't think shareholders should simply follow insider transactions. 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'.
The Last 12 Months Of Insider Transactions At CPMC Holdings
In the last twelve months, the biggest single purchase by an insider was when Executive Chairman Xin Zhang bought HK$946k worth of shares at a price of HK$2.62 per share. So it's clear an insider wanted to buy, at around the current price, which is HK$2.83. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for CPMC Holdings share holders is that an insider was buying at near the current price. Xin Zhang was the only individual insider to buy shares in the last twelve months.
Xin Zhang bought a total of 411k shares over the year at an average price of HK$2.61. 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!
CPMC Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does CPMC Holdings Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 2.0% of CPMC Holdings shares, worth about HK$66m, according to our data. However, it's possible that insiders might have an indirect interest through a more complex structure. We do generally prefer see higher levels of insider ownership.
What Might The Insider Transactions At CPMC Holdings Tell Us?
It doesn't really mean much that no insider has traded CPMC Holdings shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in CPMC Holdings and their transactions don't cause us concern. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for CPMC Holdings.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.