While it's been a great week for Sino-Entertainment Technology Holdings Limited (HKG:6933) shareholders after stock gained 24%, they should consider it with a grain of salt. Although prices were relatively low, insiders chose to sell CN¥3.4m worth of stock in the past 12 months. This could be a sign of impending weakness.

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

View our latest analysis for Sino-Entertainment Technology Holdings

Sino-Entertainment Technology Holdings Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Executive Chairman, Jiaheng Sui, for HK$1.9m worth of shares, at about HK$1.90 per share. That means that an insider was selling shares at slightly below the current price (HK$5.00). 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. 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. It is worth noting that this sale was only 0.6% of Jiaheng Sui's holding. Jiaheng Sui was the only individual insider to sell over the last year.

Jiaheng Sui ditched 2.00m shares over the year. The average price per share was CN¥1.68. 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!

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Sino-Entertainment Technology Holdings insiders own 39% of the company, currently worth about HK$795m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Sino-Entertainment Technology Holdings Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Sino-Entertainment Technology Holdings shares in the last quarter. While we feel good about high insider ownership of Sino-Entertainment Technology Holdings, we can't say the same about the selling of shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Sino-Entertainment Technology Holdings. At Simply Wall St, we've found that Sino-Entertainment Technology Holdings has 2 warning signs (1 is significant!) that deserve your attention before going any further with your analysis.

Of course Sino-Entertainment Technology Holdings 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, but not derivative transactions.

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