The fact that multiple Lygend Resources & Technology Co., Ltd. (HKG:2245) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, if numerous insiders are selling, shareholders should investigate more.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
View our latest analysis for Lygend Resources & Technology
Lygend Resources & Technology Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Founder, Jianyong Cai, sold HK$22m worth of shares at a price of HK$6.30 per share. That means that an insider was selling shares at slightly below the current price (HK$9.72). 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. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 7.5% of Jianyong Cai's stake.
In the last year Lygend Resources & Technology insiders didn't buy any company stock. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).
Insiders At Lygend Resources & Technology Have Sold Stock Recently
The last three months saw significant insider selling at Lygend Resources & Technology. In total, Founder Jianyong Cai dumped HK$22m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Does Lygend Resources & Technology Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Lygend Resources & Technology insiders own 48% of the company, worth about HK$7.3b. 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 Lygend Resources & Technology Tell Us?
An insider sold Lygend Resources & Technology shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. But since Lygend Resources & Technology is profitable and growing, we're not too worried by this. 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. For example, Lygend Resources & Technology has 4 warning signs (and 2 which don't sit too well with us) we think you should know about.
But note: Lygend Resources & Technology 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.