Selling CN¥46m Of Stock Was Lucrative Decision For Haichang Ocean Park Holdings Insiders

While Haichang Ocean Park Holdings Ltd. (HKG:2255) shareholders have had a good week with the stock up 13%, they shouldn't let their guards down. The fact that insiders chose to dispose of CN¥46m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At Haichang Ocean Park Holdings

Over the last year, we can see that the biggest insider sale was by the Non-Executive Director, Cheng Qu, for HK$8.3m worth of shares, at about HK$0.32 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of HK$0.39. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 0.7% of Cheng Qu's holding. Cheng Qu was the only individual insider to sell over the last year.

Cheng Qu ditched 133.72m shares over the year. The average price per share was CN¥0.34. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Haichang Ocean Park Holdings

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Insiders At Haichang Ocean Park Holdings Have Sold Stock Recently

The last three months saw significant insider selling at Haichang Ocean Park Holdings. In total, Non-Executive Director Cheng Qu sold HK$46m 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. It's great to see that Haichang Ocean Park Holdings insiders own 28% of the company, worth about HK$1.4b. 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 Haichang Ocean Park Holdings Insiders?

An insider sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. 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 Haichang Ocean Park Holdings. To help with this, we've discovered 3 warning signs (1 is a bit unpleasant!) that you ought to be aware of before buying any shares in Haichang Ocean Park Holdings.

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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.