Keep An Eye On Star Plus Legend Holdings As Insider Stock Selling Hits CN¥393m

Last week, Star Plus Legend Holdings Limited's (HKG:6683) stock jumped 10%, but insiders who sold CN¥393m worth of stock in over the past year are likely to be in a better position. Selling at an average price of CN¥7.20, which is higher than the current price, may have been the wisest decision for these insiders as their investment would have been worth less now than when they sold.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At Star Plus Legend Holdings

Over the last year, we can see that the biggest insider purchase was by CFO & Executive Director Kwok Fai Lai for HK$392m worth of shares, at about HK$7.20 per share. That means that an insider was happy to buy shares at above the current price of HK$4.38. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Kwok Fai Lai was the only individual insider to buy shares in the last twelve months. Notably Kwok Fai Lai was also the biggest seller.

In total, Star Plus Legend Holdings insiders sold more than they bought over the last year. 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!

Check out our latest analysis for Star Plus Legend Holdings

I will like Star Plus Legend Holdings better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Star Plus Legend Holdings Insiders Are Selling The Stock

The last three months saw significant insider selling at Star Plus Legend Holdings. Specifically, Independent Non-Executive Director Ching Yee Chung ditched HK$813k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership Of Star Plus Legend Holdings

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. Star Plus Legend Holdings insiders own 47% of the company, currently worth about HK$2.0b based on the recent share price. 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 Does This Data Suggest About Star Plus Legend Holdings Insiders?

An insider sold stock recently, but they haven't been buying. And our longer term analysis of insider transactions didn't bring confidence, either. It is good to see high insider ownership, but the insider selling leaves us cautious. 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 2 warning signs for Star Plus Legend Holdings (1 is potentially serious!) and we strongly recommend you look at these before investing.

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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.