By selling CN¥20m worth of Dashan Education Holdings Limited (HKG:9986) stock at an average sell price of CN¥2.60 over the last year, insiders seemed to have made the most of their holdings. The company's market valuation decreased by HK$432m after the stock price dropped 16% over the past week, but insiders were spared from painful losses.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
View our latest analysis for Dashan Education Holdings
The Last 12 Months Of Insider Transactions At Dashan Education Holdings
Over the last year, we can see that the biggest insider sale was by the insider, Xi Wang, for HK$9.4m worth of shares, at about HK$2.28 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of HK$2.93. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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 1.9% of Xi Wang's holding. Xi Wang was the only individual insider to sell over the last year. Notably Xi Wang was also the biggest buyer, having purchased HK$4.1m worth of shares.
Xi Wang divested 7.84m shares over the last 12 months at an average price of CN¥2.60. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Dashan Education 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.
Insiders At Dashan Education Holdings Have Sold Stock Recently
We've seen more insider selling than insider buying at Dashan Education Holdings recently. In total, insider Xi Wang sold HK$20m worth of shares in that time. On the other hand we note insider Xi Wang bought HK$4.1m worth of shares , as previously mentioned . Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
Insider Ownership Of Dashan Education Holdings
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Dashan Education Holdings insiders own 61% of the company, currently worth about HK$1.4b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Dashan Education Holdings Tell Us?
The stark truth for Dashan Education Holdings is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Dashan Education Holdings is showing 3 warning signs in our investment analysis, and 2 of those are a bit concerning...
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.
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