EN
Insiders Of Duiba Group Retain CN¥15m Of Investment Selling At Higher Prices
While Duiba Group Limited (HKG:1753) shareholders have had a good week with the stock up 26%, they shouldn't let their guards down. In spite of the relatively cheap prices, insiders made the decision to sell CN¥15m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At Duiba Group
In fact, the recent sale by Yang Liu was the biggest sale of Duiba Group shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was below the current price of HK$1.14, 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 only 46% of Yang Liu's holding.
Over the last year, we can see that insiders have bought 58.40k shares worth HK$48k. But insiders sold 30.00m shares worth HK$15m. 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!
Check out our latest analysis for Duiba Group
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.
Insiders At Duiba Group Have Sold Stock Recently
Over the last three months, we've seen notably more insider selling, than insider buying, at Duiba Group. In total, insider Yang Liu sold HK$15m worth of shares in that time. On the flip side, insiders spent HK$48k on purchasing shares (as mentioned above) . We don't view these transactions as a positive sign.
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Duiba Group insiders own 51% of the company, currently worth about HK$621m 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.
What Might The Insider Transactions At Duiba Group Tell Us?
The insider sales have outweighed the insider buying, at Duiba Group, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Duiba Group. To help with this, we've discovered 3 warning signs (2 are concerning!) that you ought to be aware of before buying any shares in Duiba Group.
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.