It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Geely Automobile Holdings Limited (HKG:175), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. 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 Geely Automobile Holdings
The Last 12 Months Of Insider Transactions At Geely Automobile Holdings
The Executive Director, Cong Hui An, made the biggest insider sale in the last 12 months. That single transaction was for HK$177m worth of shares at a price of HK$16.53 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (HK$12.76). So it may not tell us anything about how insiders feel about the current share price. Notably Cong Hui An was also the biggest buyer, having purchased HK$122m worth of shares.
In the last twelve months insiders purchased 10.4m shares for HK$122m. But insiders sold 36.8m shares worth HK$619m. All up, insiders sold more shares in Geely Automobile Holdings than they bought, over the last year. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Geely Automobile Holdings Have Bought Stock Recently
It's good to see that Geely Automobile Holdings insiders have made notable investments in the company's shares. Overall, three insiders shelled out CN¥122m for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.
Insider Ownership of Geely Automobile Holdings
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Geely Automobile Holdings insiders own 0.6% of the company, worth about HK$725m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Geely Automobile Holdings Tell Us?
It's certainly positive to see the recent insider purchases. On the other hand the transaction history, over the last year, isn't so positive. The recent buying by some insiders, along with high insider ownership, suggest that Geely Automobile Holdings insiders are fairly aligned, and optimistic. Of course, the future is what matters most. So if you are interested in Geely Automobile Holdings, you should check out this free report on analyst forecasts for the company.
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.