More Money In The Bank For Crosstec Group Holdings Insiders Who Divested HK$345m
While it’s been a great week for Crosstec Group Holdings Limited (HKG:3893) shareholders after stock gained 25%, they should consider it with a grain of salt. The fact that insiders chose to dispose of HK$345m 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, we do think it is perfectly logical to keep tabs on what insiders are doing.
Crosstec Group Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the insider, Zhou Yi, for HK$107m worth of shares, at about HK$1.19 per share. That means that an insider was selling shares at slightly below the current price (HK$1.43). 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. This single sale was 69% of Zhou Yi's stake. Zhou Yi was the only individual insider to sell shares in the last twelve months.
Zhou Yi sold a total of 330.00m shares over the year at an average price of HK$1.05. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
View our latest analysis for Crosstec Group Holdings
For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.
Crosstec Group Holdings Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Crosstec Group Holdings shares. In total, insider Zhou Yi sold HK$107m 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 Of Crosstec Group Holdings
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 22% of Crosstec Group Holdings shares, worth about HK$269m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Crosstec Group Holdings Tell Us?
An insider sold Crosstec Group Holdings shares recently, but they didn't buy any. 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. 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. Be aware that Crosstec Group Holdings is showing 5 warning signs in our investment analysis, and 4 of those are a bit unpleasant...
But note: Crosstec Group Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.