Bullish South Manganese Investment Insiders Rewarded As Their Investment Rises To HK$701.5m
Last week, South Manganese Investment Limited (HKG:1091) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 12% last week, resulting in a HK$247m increase in the company's market worth, implying a 114% gain on their initial purchase. As a result, the stock they originally bought for HK$328.3m is now worth HK$701.5m.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
South Manganese Investment Insider Transactions Over The Last Year
The insider Xuming Chen made the biggest insider purchase in the last 12 months. That single transaction was for HK$184m worth of shares at a price of HK$0.22 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of HK$0.47. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
In the last twelve months insiders purchased 1.51b shares for HK$328m. But they sold 151.00m shares for HK$47m. In total, South Manganese Investment insiders bought more than they sold over the last year. 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!
See our latest analysis for South Manganese Investment
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Insiders At South Manganese Investment Have Sold Stock Recently
The last quarter saw substantial insider selling of South Manganese Investment shares. In total, insider Ming Cheung dumped HK$47m 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.
Insider Ownership Of South Manganese Investment
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that South Manganese Investment insiders own 51% of the company, worth about HK$1.2b. 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 South Manganese Investment Insiders?
An insider hasn't bought South Manganese Investment stock in the last three months, but there was some selling. But we take heart from prior transactions. On top of that, insiders own a significant portion of the company. So the recent selling doesn't worry us. 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. For instance, we've identified 4 warning signs for South Manganese Investment (2 shouldn't be ignored) you should be aware of.
But note: South Manganese Investment may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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 of direct interests only, but not derivative transactions or indirect interests.
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