While E-Commodities Holdings Limited (HKG:1733) shareholders have had a good week with the stock up 22%, they shouldn’t let their guards down. Although prices were relatively low, insiders chose to sell HK$61m worth of stock in the past 12 months. This could be a sign of impending weakness.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
E-Commodities Holdings Insider Transactions Over The Last Year
Notably, that recent sale by insider Xingchun Wang was not the only time they sold E-Commodities Holdings shares this year. They previously made an even bigger sale of -HK$32m worth of shares at a price of HK$1.96 per share. That means that even when the share price was below the current price of HK$2.35, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. This single sale was just 33% of Xingchun Wang’s stake.
Xingchun Wang ditched 31.28m shares over the year. The average price per share was HK$1.95. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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 E-Commodities Holdings Have Sold Stock Recently
The last three months saw significant insider selling at E-Commodities Holdings. In total, insider Xingchun Wang sold HK$61m worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership of E-Commodities 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. We usually like to see fairly high levels of insider ownership. Our data indicates that E-Commodities Holdings insiders own about HK$47m worth of shares (which is 0.8% of the company). But they may have an indirect interest through a corporate structure that we haven’t picked up on. Whilst better than nothing, we’re not overly impressed by these holdings.
So What Does This Data Suggest About E-Commodities Holdings Insiders?
An insider sold stock recently, but they haven’t been buying. And there weren’t any purchases to give us comfort, over the last year. But since E-Commodities Holdings is profitable and growing, we’re not too worried by this. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. We’re in no rush to buy! In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing E-Commodities Holdings. Our analysis shows 5 warning signs for E-Commodities Holdings (2 shouldn’t be ignored!) and we strongly recommend you look at these before investing.
Of course E-Commodities Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.