We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell China Boqi Environmental (Holding) Co., Ltd. (HKG:2377), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
China Boqi Environmental (Holding) Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Vice Chairman & CEO Zhijun Zeng for HK$638k worth of shares, at about HK$1.15 per share. That means that an insider was happy to buy shares at around the current price of HK$1.27. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. The good news for China Boqi Environmental (Holding) share holders is that an insider was buying at near the current price. Zhijun Zeng was the only individual insider to buy during the last year.
Zhijun Zeng bought a total of 2.35m shares over the year at an average price of HK$1.25. You can see the insider transactions (by 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!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
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. A high insider ownership often makes company leadership more mindful of shareholder interests. China Boqi Environmental (Holding) insiders own about HK$680m worth of shares (which is 53% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About China Boqi Environmental (Holding) Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, China Boqi Environmental (Holding) insiders feel good about the company's future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing China Boqi Environmental (Holding). At Simply Wall St, we found 3 warning signs for China Boqi Environmental (Holding) that deserve your attention before buying any shares.
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, but not derivative transactions.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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