Last week, MTT Group Holdings Limited's (HKG:2350) stock jumped 20%, but insiders who sold HK$26m worth of stock in over the past year are likely to be in a better position. Holding on to stock would have meant their investment would be worth less now than it was at the time of sale. Thus selling at an average price of HK$0.35, which is higher than the current price, may have been the best decision.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
See our latest analysis for MTT Group Holdings
The Last 12 Months Of Insider Transactions At MTT Group Holdings
The Executive Chairman & CEO, Ka Wai Ip, made the biggest insider sale in the last 12 months. That single transaction was for HK$14m worth of shares at a price of HK$0.28 each. That means that even when the share price was below the current price of HK$0.49, 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. We note that the biggest single sale was only 11% of Ka Wai Ip's holding.
In total, MTT Group Holdings insiders sold more than they bought over the last year. 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!
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.
Insider Ownership Of MTT 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. A high insider ownership often makes company leadership more mindful of shareholder interests. MTT Group Holdings insiders own 80% of the company, currently worth about HK$245m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At MTT Group Holdings Tell Us?
There haven't been any insider transactions in the last three months -- that doesn't mean much. While we feel good about high insider ownership of MTT Group Holdings, we can't say the same about the selling of shares. 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. While conducting our analysis, we found that MTT Group Holdings has 2 warning signs and it would be unwise to ignore these.
But note: MTT 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.
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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.