While China International Development Corporation Limited (HKG:264) shareholders have had a good week with the stock up 28%, they shouldn't let their guards down. Even though stock prices were relatively low, insiders elected to sell HK$45m worth of stock in the last year, which could indicate some expected downturn.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
The Last 12 Months Of Insider Transactions At China International Development
The insider, Jingfei Zhao, made the biggest insider sale in the last 12 months. That single transaction was for HK$31m worth of shares at a price of HK$1.55 each. That means that even when the share price was below the current price of HK$2.26, 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 7.8% of Jingfei Zhao's holding. The only individual insider seller over the last year was Jingfei Zhao.
Jingfei Zhao divested 26.28m shares over the last 12 months at an average price of HK$1.69. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
View our latest analysis for China International Development
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China International Development Insiders Are Selling The Stock
The last quarter saw substantial insider selling of China International Development shares. In total, insider Jingfei Zhao sold HK$3.8m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Insider Ownership
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. China International Development insiders own about HK$475m worth of shares (which is 44% 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.
So What Do The China International Development Insider Transactions Indicate?
An insider hasn't bought China International Development stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing China International Development. Case in point: We've spotted 3 warning signs for China International Development you should be aware of, and 2 of them are significant.
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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 of direct interests only, but not derivative transactions or indirect interests.
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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.