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The Executive Chairman & MD of Great Eagle Holdings Limited (HKG:41), Ka Shui Lo, Just Bought A Few More Shares

Those following along with Great Eagle Holdings Limited (HKG:41) will no doubt be intrigued by the recent purchase of shares by Ka Shui Lo, Executive Chairman & MD of the company, who spent a stonking HK$5.7m on stock at an average price of HK$18.97. There's no denying a buy of that magnitude suggests conviction in a brighter future, although we do note that proportionally it only increased their holding by 0.2%.

Check out our latest analysis for Great Eagle Holdings

Great Eagle Holdings Insider Transactions Over The Last Year

In fact, the recent purchase by Executive Chairman & MD Ka Shui Lo was not their only acquisition of Great Eagle Holdings shares this year. They previously made an even bigger purchase of HK$78m worth of shares at a price of HK$19.60 per share. That means that even when the share price was higher than HK$18.46 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels. We note that Ka Shui Lo was also the biggest seller.

Happily, we note that in the last year insiders paid HK$288m for 11.97m shares. On the other hand they divested 10000 shares, for HK$233k. In the last twelve months there was more buying than selling by Great Eagle Holdings insiders. Their average price was about HK$24.07. These transactions suggest that insiders have considered the current price attractive. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

SEHK:41 Recent Insider Trading May 30th 2020
SEHK:41 Recent Insider Trading May 30th 2020

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership of Great Eagle Holdings

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Great Eagle Holdings insiders own 27% of the company, currently worth about HK$3.5b 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 Does This Data Suggest About Great Eagle Holdings Insiders?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Great Eagle Holdings. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with Great Eagle Holdings and understanding them should be part of your investment process.

But note: Great Eagle Holdings 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.

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

This article by Simply Wall St is general in nature. 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. Thank you for reading.

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