Selling Lai Group Holding Shares at a Lower Price Than Current Market Value May Have Been a Costly Mistake for Insiders

Even though Lai Group Holding Company Limited (HKG:8455) has fallen by 10.0% over the past week , insiders who sold HK$15m worth of stock over the past year have had less luck. Insiders might have been better off holding onto their shares, given that the average selling price of HK$0.066 is still below the current share price.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At Lai Group Holding

The insider Jia Liu made the biggest insider purchase in the last 12 months. That single transaction was for HK$15m worth of shares at a price of HK$0.067 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.045). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. The only individual insider to buy over the last year was Jia Liu.

All up, insiders sold more shares in Lai Group Holding than they bought, over the last year. 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!

See our latest analysis for Lai Group Holding

I will like Lai Group Holding 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.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Lai Group Holding insiders own 55% of the company, currently worth about HK$24m based on the recent share price. 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 Lai Group Holding Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Lai Group Holding insiders selling. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Lai Group Holding has 4 warning signs (3 shouldn't be ignored!) that deserve your attention before going any further with your analysis.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.