Despite a 11% gain in China Beststudy Education Group's (HKG:3978) stock price this week, shareholders shouldn't let up. In spite of the relatively cheap prices, insiders made the decision to sell CN¥13m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.
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.
Check out our latest analysis for China Beststudy Education Group
China Beststudy Education Group Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the insider, Wenhui Xu, for HK$2.7m worth of shares, at about HK$3.88 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of HK$4.00. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 10% of Wenhui Xu's stake. The only individual insider seller over the last year was Wenhui Xu. Notably Wenhui Xu was also the biggest buyer, having purchased HK$58k worth of shares.
Wenhui Xu sold a total of 3.80m shares over the year at an average price of CN¥3.47. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart 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 China Beststudy Education Group 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.
Does China Beststudy Education Group Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It's great to see that China Beststudy Education Group insiders own 79% of the company, worth about HK$2.3b. 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 China Beststudy Education Group Tell Us?
There haven't been any insider transactions in the last three months -- that doesn't mean much. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the China Beststudy Education Group insiders selling. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: China Beststudy Education Group 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.