Despite a 12% gain in Net-a-Go Technology Company Limited's (HKG:1483) stock price this week, shareholders shouldn't let up. The fact that insiders chose to dispose of HK$66m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.
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.
View our latest analysis for Net-a-Go Technology
Net-a-Go Technology Insider Transactions Over The Last Year
The Executive Director, Wenze Xu, made the biggest insider sale in the last 12 months. That single transaction was for HK$66m worth of shares at a price of HK$0.95 each. That means that an insider was selling shares at slightly below the current price (HK$1.23). 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. It is worth noting that this sale was 100% of Wenze Xu's holding. The only individual insider seller over the last year was Wenze Xu.
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 Net-a-Go Technology 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 Net-a-Go Technology Have Sold Stock Recently
The last quarter saw substantial insider selling of Net-a-Go Technology shares. In total, Executive Director Wenze Xu sold HK$66m 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 Net-a-Go Technology
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. We usually like to see fairly high levels of insider ownership. Net-a-Go Technology insiders own about HK$412m worth of shares (which is 42% 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 Do The Net-a-Go Technology Insider Transactions Indicate?
An insider sold Net-a-Go Technology 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. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Net-a-Go Technology. Our analysis shows 2 warning signs for Net-a-Go Technology (1 is significant!) and we strongly recommend you look at them before investing.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.