Over the past year, insiders sold CN¥1.2m worth of NetDragon Websoft Holdings Limited (HKG:777) stock at an average price of CN¥17.25 per share allowing them to get the most out of their money. The company's market worth decreased by HK$453m over the past week after the stock price dropped 5.5%, although insiders were able to minimize their losses

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for NetDragon Websoft Holdings

The Last 12 Months Of Insider Transactions At NetDragon Websoft Holdings

The Independent Non-Executive Director, Kwan Hung Lee, made the biggest insider sale in the last 12 months. That single transaction was for HK$1.2m worth of shares at a price of HK$17.25 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of HK$14.34. So it is hard to draw any strong conclusion from it. Kwan Hung Lee was the only individual insider to sell over the last year. Notably Kwan Hung Lee was also the biggest buyer, having purchased HK$308k worth of shares.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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NetDragon Websoft Holdings Insiders Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at NetDragon Websoft Holdings. In total, Independent Non-Executive Director Kwan Hung Lee sold HK$1.2m worth of shares in that time. Meanwhile Independent Non-Executive Director Kwan Hung Lee bought HK$308k worth , as we said above . The share price has moved a bit recently, but it's hard to argue that the selling is a positive.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that NetDragon Websoft Holdings insiders own 49% of the company, worth about HK$3.8b. 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 NetDragon Websoft Holdings Insider Transactions Indicate?

The insider sales have outweighed the insider buying, at NetDragon Websoft Holdings, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since NetDragon Websoft Holdings is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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. Case in point: We've spotted 2 warning signs for NetDragon Websoft Holdings you should be aware of.

Of course NetDragon Websoft 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.

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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.