Insiders Made Right Decision To Sell As Butong Group Dips 10%
By selling CN¥186m worth of Butong Group (HKG:6090) stock at an average sell price of CN¥34.76 over the last year, insiders seemed to have made the most of their holdings. The company's market valuation decreased by HK$401m after the stock price dropped 10% over the past week, but insiders were spared from painful losses.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
Butong Group Insider Transactions Over The Last Year
The Founder & Executive Chairman, Wei Wang, made the biggest insider sale in the last 12 months. That single transaction was for HK$113m worth of shares at a price of HK$37.70 each. That means that an insider was selling shares at slightly below the current price (HK$39.54). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 7.1% of Wei Wang's stake. The only individual insider seller over the last year was Wei Wang.
Wei Wang sold a total of 5.35m shares over the year at an average price of CN¥34.76. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Check out our latest analysis for Butong Group
I will like Butong Group better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.
Insiders At Butong Group Have Sold Stock Recently
The last quarter saw substantial insider selling of Butong Group shares. In total, Founder & Executive Chairman Wei Wang dumped HK$73m 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 Butong Group
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. It's great to see that Butong Group insiders own 47% of the company, worth about HK$1.7b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Butong Group Tell Us?
An insider sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. 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. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Butong Group. Every company has risks, and we've spotted 1 warning sign for Butong Group you should know about.
Of course Butong Group 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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