Despite a 11% gain in Art Group Holdings Limited’s (HKG:565) stock price this week, shareholders shouldn’t let up. The fact that insiders chose to dispose of HK$9.4m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.
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.
View our latest analysis for Art Group Holdings
The Last 12 Months Of Insider Transactions At Art Group Holdings
The insider, Cho Ying Lam, made the biggest insider sale in the last 12 months. That single transaction was for HK$9.4m worth of shares at a price of HK$0.046 each. That means that even when the share price was below the current price of HK$1.31, 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 100% of Cho Ying Lam’s holding. Cho Ying Lam was the only individual insider to sell over the last year.
You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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.
Does Art Group Holdings Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Art Group Holdings insiders own about HK$1.6b worth of shares (which is 45% 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 Art Group Holdings Insider Transactions Indicate?
The fact that there have been no Art Group Holdings insider transactions recently certainly doesn’t bother us. It’s great to see high levels of insider ownership, but looking back over the last year, we don’t gain confidence from the Art Group Holdings insiders selling. So while it’s helpful to know what insiders are doing in terms of buying or selling, it’s also helpful to know the risks that a particular company is facing. Our analysis shows 3 warning signs for Art Group Holdings (2 can’t be ignored!) and we strongly recommend you look at these before investing.
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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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.
