Insiders Made Right Decision To Sell As FDB Holdings Dips 16%

Insiders seem to have made the most of their holdings by selling HK$30m worth of FDB Holdings Limited (HKG:1826) stock at an average sell price of HK$0.076 during the past year. The company’s market cap plunged by HK$45m after price dropped by 16% last week but insiders were able to limit their loss to an extent.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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FDB Holdings Insider Transactions Over The Last Year

The CEO, Compliance Officer & Chairman of the Board, Kin Siu Ng, made the biggest insider sale in the last 12 months. That single transaction was for HK$30m worth of shares at a price of HK$0.076 each. That means that an insider was selling shares at slightly below the current price (HK$0.15). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 48% of Kin Siu Ng's stake. The only individual insider seller over the last year was Kin Siu Ng.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

Check out our latest analysis for FDB Holdings

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Does FDB Holdings Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. FDB Holdings insiders own about HK$95m worth of shares (which is 40% of the company). 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 FDB Holdings Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. While we feel good about high insider ownership of FDB Holdings, we can't say the same about the selling of shares. 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. To that end, you should learn about the 3 warning signs we've spotted with FDB Holdings (including 1 which makes us a bit uncomfortable).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.