Keep An Eye On Canggang Railway As Insider Stock Selling Hits CN¥1.1b
Despite the fact that Canggang Railway Limited (HKG:2169) stock rose 15% last week, insiders who sold CN¥1.1b worth of stock in the previous 12 months are likely to be better off. Holding on to stock would have meant their investment would be worth less now than it was at the time of sale. Thus selling at an average price of CN¥0.81, which is higher than the current price, may have been the best decision.
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.
Canggang Railway Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Chairman, Yongliang Liu, sold HK$312m worth of shares at a price of HK$0.81 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is HK$0.53. So it may not tell us anything about how insiders feel about the current share price. Yongliang Liu was the only individual insider to sell shares in the last twelve months.
Yongliang Liu divested 1.40b shares over the last 12 months at an average price of CN¥0.81. 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 Canggang Railway
For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Canggang Railway insiders own 44% of the company, currently worth about HK$893m 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 Do The Canggang Railway Insider Transactions Indicate?
The fact that there have been no Canggang Railway insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Canggang Railway, we can't say the same about the selling of shares. 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. For example, Canggang Railway has 3 warning signs (and 2 which shouldn't be ignored) we think you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.