Insiders Could Have Profited By Holding onto Winshine Science Shares Despite 20% Drop

Winshine Science Company Limited's (HKG:209) stock price has dropped 20% in the previous week, but insiders who sold HK$45m in 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$0.55 is still below the current share price.

While insider transactions are not the most important thing when it comes to long-term investing, 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 Winshine Science

The CEO & Executive Chairlady Jingyu Wang made the biggest insider purchase in the last 12 months. That single transaction was for HK$19m worth of shares at a price of HK$0.50 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.18). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

Over the last year, we can see that insiders have bought 46.79m shares worth HK$20m. On the other hand they divested 82.60m shares, for HK$45m. Over the last year we saw more insider selling of Winshine Science shares, than buying. The sellers received a price of around HK$0.55, on average. Insider selling doesn't make us excited to buy. But we note that the selling, on average, was at well above the recently traded price of HK$0.18. 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 Winshine Science

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).

Does Winshine Science 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data suggests Winshine Science insiders own 3.6% of the company, worth about HK$9.7m. We prefer to see high levels of insider ownership.

What Might The Insider Transactions At Winshine Science Tell Us?

The fact that there have been no Winshine Science insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by Winshine Science insiders. And we're not picking up on high enough insider ownership to give us any comfort. 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 Winshine Science (3 are concerning!) that we believe deserve your full attention.

Of course Winshine Science may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.