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We have lost count of the number of times insiders have racked up shares in a company that is improving significantly. Unfortunately, there are also many examples of stock prices plummeting after insiders sell stocks. We will therefore examine whether insiders have bought or sold shares of Guru Online (Holdings) Limited (HKG: 8121).
What is insider selling?
Most investors know that it is perfectly okay for business executives, such as directors of the board of directors, to buy and sell company stock. However, these insiders should disclose their trading activities and not trade inside information.
Insider trading is not the most important thing when it comes to investing for the long term. But also, we would consider it foolish to ignore insider trading altogether. As Peter Lynch said, “Insiders can sell their shares for any number of reasons, but they buy them for one only: they think the price will go up.”
See our latest analysis for Guru Online (Holdings)
The last 12 months of insider trading at Guru Online (Holdings)
In fact, the recent Wing Cheung sale was the biggest sale of Guru Online (Holdings) shares by an insider in the past twelve months, according to our records. This means that an insider was selling shares at a price slightly lower than the current price (HK $ 0.068). When an insider sells below the current price, it suggests that he or she considered that lower price to be fair. This makes us wonder what they think of the recent (higher) valuation. While insider selling is not a positive sign, we cannot be sure that this means that insiders think stocks are fully valued, so it is only a weak sign. We note that the biggest single sale was 100% of Wing Cheung’s stake.
The chart below shows insider trading (by companies and individuals) over the past year. If you want to know exactly who sold, for how much and when, just click on the graph below!
If you are like me then you do not want to miss it free list of growing companies that insiders buy.
Guru Online Insiders (Holdings) Sold Shares Recently
The last quarter saw significant insider sales of shares of Guru Online (Holdings). Specifically, insider Wing Cheung gave up HK $ 6.8 million worth of shares during that time, and we didn’t record any purchases. This may suggest that some insiders think stocks aren’t cheap.
Does Guru Online (Holdings) enjoy high insider ownership?
Another way to test the alignment between a company’s executives and other shareholders is to look at how many shares they own. We generally like to see fairly high levels of insider ownership. It appears that insiders of Guru Online (Holdings) own 36% of the company, worth around HK $ 40 million. This level of insider ownership is good but just short of being particularly noteworthy. It certainly suggests a reasonable degree of alignment.
So what does this data suggest about Guru Online insiders (holdings)?
An insider recently sold stocks, but they didn’t buy. And there haven’t been any purchases to comfort us in the past year. Insiders own stocks, but we remain fairly cautious given the sales history. We practice some caution before buying! So, while it is useful to know what insiders are doing in terms of buying or selling, it is also useful to know the risks that a particular company faces. Every business has risks, and we have spotted 4 warning signs for Guru Online (Holdings) (1 of which doesn’t suit us very well!) you should know that.
Of course, you might find a fantastic investment looking elsewhere. So take a look at this free list of interesting companies.
For the purposes of this article, insiders are the persons who report their transactions to the relevant regulatory body. We currently account for open market transactions and private assignments, but not derivative transactions.
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