Selling HK$38m Of Stock Was Lucrative Decision For EDICO Holdings Insiders
Despite a 11% gain in EDICO Holdings Limited's (HKG:8450) stock price this week, shareholders shouldn't let up. The fact that insiders chose to dispose of HK$38m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.
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.
EDICO Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the insider, Sin Yuen, for HK$38m worth of shares, at about HK$0.20 per share. That means that even when the share price was below the current price of HK$0.69, an insider wanted to cash in some shares. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 99% of Sin Yuen's holding. The only individual insider seller over the last year was Sin Yuen.
The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
View our latest analysis for EDICO Holdings
If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.
Insider Ownership
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. It's great to see that EDICO Holdings insiders own 65% of the company, worth about HK$450m. 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 EDICO Holdings Insiders?
It doesn't really mean much that no insider has traded EDICO Holdings shares in the last quarter. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of EDICO Holdings insider transactions don't fill us with confidence. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, EDICO Holdings has 3 warning signs (and 1 which can't be ignored) we think you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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