Insider activity down for third straight week as market volatility spikes

PUBLISHED : Sunday, 11 February, 2018, 7:26pm
UPDATED : Sunday, 11 February, 2018, 11:38pm

The insider activity fell for the third week straight as buyers turned cautious in this recent market meltdown with 15 companies that recorded 64 purchases worth HK$38 million (US$4.86 million) versus five firms with 26 disposals worth HK$41 million.

The number of companies and value on the buying side were sharply down from the previous week’s 22 firms and HK$290 million. The number of purchases, however, was consistent with the previous week’s 65 acquisitions. The sales, on the other hand, were sharply down from the previous week’s nine companies, 49 disposals and HK$184 million.

While the buying by directors fell last week, the buy-back activity rebounded after falling for two straight weeks with 13 companies that posted 60 repurchases worth HK$87 million based on filings from February 2 to 8.

Investors should note that the insider trading and buy-backs are expected to fall even more in the next few weeks due to the upcoming busy reporting period from March to April. Directors and listed firms are prohibited from trading in the company’s shares one to two months before the announcement of earnings results.

There were only a few significant trades last week with rare insider buys in Cafe de Coral Holdings and Telecom Digital Holdings and buy-backs in Nanyang Holdings.

Non-executive chairman Sunny Lo Hoi-kwong bought 600,000 shares of fast food restaurants operator Cafe de Coral Holdings from February 1 to 6 at an average of HK$20.23 each. The trades increased his holdings to 64.434 million shares or 11 per cent of the issued capital. He previously acquired 1.32 million shares in March 2003 at HK$4.83 each. The stock closed at HK$19.98 on Friday.

Significant Points

The recent purchases by Lo are his first on-market trades since 2003

The recent purchases were made on the back of the 28 per cent drop in the share price since September 2016 from HK$28.15

The recent purchases by the chairman are the first trades by a director of the company since September 2015

Chairman Cheung King-shek bought 500,000 shares of interactive mobile data services provider Telecom Digital Holdings on February 7 at HK$2.99 each. The trade increased his holdings to 240.50 million shares or 59.57 per cent of the issued capital. The group announced its interim results in November 2017 with profit up by 15.97 per cent to HK$60.497 million. The stock closed at HK$2.92 on Friday.

Significant Points

The purchase by Cheung are his first on-market trade since his appointment as director in 2002 and chairman in 2014

The purchase was made on the back of the 17 per cent drop in the share price since November 2017 from HK$3.58

The purchase by the chairman is the first trade by a director of the company since the group moved its listing from GEM to the main board in May 2017

Property investment firm Nanyang Holdings picked up where it left off in January with 61,000 shares bought from February 6 to 7 at an average of HK$52.99 each. The group previously acquired 28,000 shares from January 12 to 26 at an average of HK$52.03 each. Before the buy-backs this year, the company acquired 160,000 shares from February to December 2017, 24,000 shares from November to December 2016 and 12,000 shares in January 2016. Before the repurchases since 2016, the company acquired 160,000 shares in January 2013 at HK$27.06 each and 738,000 shares from September 2010 to October 2011 at an average of HK$16.38 each. The stock closed at HK$53.00 on Friday.

Significant Points

The buy-backs since January were completed at higher than the company’s acquisition prices from 1996 to 2017

The buy-backs from February 6 to 7 accounted for 88 per cent of the stock’s trading volume

The group announced in August 2017 a 207 per cent gain in first-half profit to HK$195.05 million

Robert Halili is managing director of Asia Insider

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