Even though Shenzhen Pagoda Industrial (Group) Corporation Limited (HKG:2411) has fallen by 13% over the past week , insiders who sold CN¥24m worth of stock over the past year have had less luck. Insiders would probably have been better off holding on to their shares given that the average selling price of CN¥3.18 is still lower than the current share price.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Shenzhen Pagoda Industrial (Group) Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Executive Deputy GM & Executive Director, Yue Jiao, for HK$6.6m worth of shares, at about HK$3.28 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is HK$2.47. So it is hard to draw any strong conclusion from it. Yue Jiao was the only individual insider to sell over the last year.

Yue Jiao divested 7.51m shares over the last 12 months at an average price of CN¥3.18. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

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Shenzhen Pagoda Industrial (Group) Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Shenzhen Pagoda Industrial (Group). In total, Executive Deputy GM & Executive Director Yue Jiao sold HK$24m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Does Shenzhen Pagoda Industrial (Group) Boast High 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. Shenzhen Pagoda Industrial (Group) insiders own 27% of the company, currently worth about HK$1.1b based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Shenzhen Pagoda Industrial (Group) Insiders?

An insider sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that Shenzhen Pagoda Industrial (Group) is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 2 warning signs for Shenzhen Pagoda Industrial (Group) (of which 1 shouldn't be ignored!) you should know about.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com