The recent 14% drop in Qing Hua Holding Group Company Limited's (HKG:8082) stock could come as a blow to insiders who purchased HK$21.4m worth of stock at an average buy price of HK$0.031 over the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth HK$13.3m which is not ideal.
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.
The Last 12 Months Of Insider Transactions At Qing Hua Holding Group
In the last twelve months, the biggest single purchase by an insider was when insider Xuefeng Liu bought HK$15m worth of shares at a price of HK$0.029 per share. That means that even when the share price was higher than HK$0.019 (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. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
Happily, we note that in the last year insiders paid HK$21m for 699.59m shares. On the other hand they divested 518.09m shares, for HK$15m. In total, Qing Hua Holding Group insiders bought more than they sold over the last year. You can see the insider transactions (by companies and 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!
Check out our latest analysis for Qing Hua Holding Group
Qing Hua Holding Group is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Qing Hua Holding Group insiders own 38% of the company, worth about HK$19m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Qing Hua Holding Group Insiders?
It doesn't really mean much that no insider has traded Qing Hua Holding Group shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Qing Hua Holding Group and their transactions don't cause us concern. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example, Qing Hua Holding Group has 4 warning signs (and 3 which are significant) we think you should know about.
Of course Qing Hua Holding 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.