In the last year, many Lenovo Group Limited (HKG:992) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

The Last 12 Months Of Insider Transactions At Lenovo Group

The Chairman & CEO, Yuanqing Yang, made the biggest insider sale in the last 12 months. That single transaction was for HK$204m worth of shares at a price of HK$8.43 each. That means that an insider was selling shares at slightly below the current price (HK$9.50). 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. This single sale was just 3.2% of Yuanqing Yang's stake.

Happily, we note that in the last year insiders paid HK$3.5m for 438.59k shares. But insiders sold 77.37m shares worth HK$679m. All up, insiders sold more shares in Lenovo Group than they bought, over the last year. 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!

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Insiders At Lenovo Group Have Sold Stock Recently

There was substantially more insider selling, than buying, of Lenovo Group shares over the last three months. We note Independent Non-Executive Director William Tudor Brown cashed in HK$2.7m worth of shares. On the other hand we note insiders bought HK$867k worth of shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Does Lenovo Group Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Lenovo Group insiders own about HK$7.1b worth of shares (which is 6.0% 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 Does This Data Suggest About Lenovo Group Insiders?

The insider sales have outweighed the insider buying, at Lenovo Group, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Lenovo Group. Case in point: We've spotted 3 warning signs for Lenovo Group you should be aware of.

Of course Lenovo Group 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 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.