Mindtell Technology's Insiders' Timely Sale May Have Helped Mitigate 16% Dip in Share Price

Insiders seem to have made the most of their holdings by selling RM24m worth of Mindtell Technology Limited (HKG:8611) stock at an average sell price of RM0.33 during the past year. After the stock price dropped 16% last week, the company's market value declined by HK$61m, but insiders were able to mitigate their losses.

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.

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The Last 12 Months Of Insider Transactions At Mindtell Technology

Over the last year, we can see that the biggest insider sale was by the insider, Pang Lam, for HK$6.9m worth of shares, at about HK$0.18 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of HK$0.68. 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. It is worth noting that this sale was 100% of Pang Lam's holding.

Over the last year we saw more insider selling of Mindtell Technology shares, than buying. 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!

Check out our latest analysis for Mindtell Technology

I will like Mindtell 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 Mindtell Technology Have Sold Stock Recently

The last quarter saw substantial insider selling of Mindtell Technology shares. In total, insider Pang Lam dumped HK$6.9m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

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. Mindtell Technology insiders own about HK$149m worth of shares (which is 47% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Mindtell Technology Insider Transactions Indicate?

An insider hasn't bought Mindtell Technology stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn't bring confidence, either. It is good to see high insider ownership, but the insider selling leaves us cautious. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example, Mindtell Technology has 6 warning signs (and 2 which are concerning) we think you should know about.

But note: Mindtell 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.