Anyone interested in New World Development Company Limited (HKG:17) should probably be aware that the Non-Executive Director, Kar-Shing Cheng, recently divested HK$1.0m worth of shares in the company, at an average price of HK$40.95 each. However, the silver lining is that the sale only reduced their total holding by 8.3%, so we’re hesitant to read anything much into it, on its own.
Check out our latest analysis for New World Development
The Non-Executive Vice Chairman, Wai-Hoi Doo, made the biggest insider sale in the last 12 months. That single transaction was for HK$13m worth of shares at a price of HK$40.65 each. That means that an insider was selling shares at below the current price (HK$40.85). 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. However, while insider selling is sometimes discouraging, it’s only a weak signal. This single sale was just 5.4% of Wai-Hoi Doo’s stake.
New World Development insiders didn’t buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
SEHK:17 Insider Trading Volume June 27th 2021
I will like New World Development better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Insiders own 0.3% of New World Development shares, worth about HK$337m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
An insider sold New World Development shares recently, but they didn’t buy any. Looking to the last twelve months, our data doesn’t show any insider buying. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. While we like knowing what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Our analysis shows 4 warning signs for New World Development (1 makes us a bit uncomfortable!) and we strongly recommend you look at them before investing.
But note: New World Development 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, but not derivative transactions.
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