For Powerwin Tech Group Insiders, Selling US$77m Of Shares Was A Smart Move

While it’s been a great week for Powerwin Tech Group Limited (HKG:2405) shareholders after stock gained 10%, they should consider it with a grain of salt. The fact that insiders chose to dispose of US$77m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

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.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

The Last 12 Months Of Insider Transactions At Powerwin Tech Group

The Executive Chairman & CEO, Xiang Li, made the biggest insider sale in the last 12 months. That single transaction was for HK$77m worth of shares at a price of HK$1.20 each. So it's clear an insider wanted to take some cash off the table, even below the current price of HK$3.05. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 44% of Xiang Li's holding. Xiang Li was the only individual insider to sell over the last year.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Check out our latest analysis for Powerwin Tech Group

I will like Powerwin Tech 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 Powerwin Tech Group Boast High Insider Ownership?

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. A high insider ownership often makes company leadership more mindful of shareholder interests. Powerwin Tech Group insiders own about HK$555m worth of shares. That equates to 23% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Powerwin Tech Group Tell Us?

The fact that there have been no Powerwin Tech Group insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Powerwin Tech Group, we can't say the same about the selling of shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 4 warning signs for Powerwin Tech Group (3 can't be ignored!) that we believe deserve your full attention.

But note: Powerwin Tech 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.