Heng Tai Consumables Group Up 22%, Insider Buyers Are Up 45%
Insiders who bought Heng Tai Consumables Group Limited (HKG:197) stock in the last 12 months were richly rewarded last week. The company's market value increased by HK$22m as a result of the stock's 22% gain over the same period. As a result, the stock they originally bought for HK$20.9m is now worth HK$30.3m.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
The Last 12 Months Of Insider Transactions At Heng Tai Consumables Group
Over the last year, we can see that the biggest insider sale was by the Chairman, Kwok Hing Lam, for HK$15m worth of shares, at about HK$0.48 per share. That means that even when the share price was below the current price of HK$0.58, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was 100% of Kwok Hing Lam's holding. Notably Kwok Hing Lam was also the biggest buyer, having purchased HK$21m worth of shares.
Over the last year, we can see that insiders have bought 52.21m shares worth HK$21m. On the other hand they divested 37.83m shares, for HK$17m. In total, Heng Tai Consumables Group insiders bought more than they sold over the last year. The average buy price was around HK$0.40. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. 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!
See our latest analysis for Heng Tai Consumables Group
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 Heng Tai Consumables Group Have Sold Stock Recently
The last quarter saw substantial insider selling of Heng Tai Consumables Group shares. In total, insider Ka Yung Hui dumped HK$982k 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
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. I reckon it's a good sign if insiders own a significant number of shares in the company. Heng Tai Consumables Group insiders own 43% of the company, currently worth about HK$53m 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 Does This Data Suggest About Heng Tai Consumables Group Insiders?
An insider hasn't bought Heng Tai Consumables Group stock in the last three months, but there was some selling. In contrast, they appear keener if you look at the last twelve months. We are also comforted by the high levels of insider ownership. So we're not too bothered by recent selling. 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. To that end, you should learn about the 4 warning signs we've spotted with Heng Tai Consumables Group (including 1 which is a bit unpleasant).
Of course Heng Tai Consumables 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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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.