Over the past year, insiders sold CN¥205m worth of Leader Education Limited (HKG:1449) stock at an average price of CN¥0.43 per share allowing them to get the most out of their money. The company's market valuation decreased by HK$124m after the stock price dropped 17% over the past week, but insiders were spared from painful losses.
While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.
The Last 12 Months Of Insider Transactions At Leader Education
Notably, that recent sale by Ling Dong is the biggest insider sale of Leader Education shares that we've seen in the last year. That means that an insider was selling shares at slightly below the current price (HK$0.75). 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. It is worth noting that this sale was 80% of Ling Dong's holding.
Ling Dong divested 478.47m shares over the last 12 months at an average price of CN¥0.43. You can see the insider transactions (by companies and 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!
See our latest analysis for Leader Education
For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.
Insiders At Leader Education Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at Leader Education. Specifically, Executive Director Ling Dong ditched HK$205m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Does Leader Education Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Leader Education insiders own 63% of the company, currently worth about HK$377m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Leader Education 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. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To that end, you should learn about the 5 warning signs we've spotted with Leader Education (including 3 which make us uncomfortable).
Of course Leader Education 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 of direct interests only, but not derivative transactions or indirect interests.
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