Insiders who bought CN¥8.00m worth of Chuanglian Holdings Limited (HKG:2371) stock in the last year recovered part of their losses as the stock rose by 12% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled CN¥5.0m since the time of purchase.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Chuanglian Holdings
In the last twelve months, the biggest single purchase by an insider was when insider Xing Lu bought HK$3.0m worth of shares at a price of HK$0.38 per share. That means that even when the share price was higher than HK$0.21 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Chuanglian Holdings insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around HK$0.57. This is nice to see since it implies that insiders might see value around current prices. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
See our latest analysis for Chuanglian Holdings
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Does Chuanglian Holdings Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Chuanglian Holdings insiders own 44% of the company, worth about HK$65m. 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 Do The Chuanglian Holdings Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Chuanglian Holdings shares in the last quarter. However, our analysis of transactions over the last year is heartening. It would be great to see more insider buying, but overall it seems like Chuanglian Holdings insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. 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. At Simply Wall St, we've found that Chuanglian Holdings has 3 warning signs (1 is concerning!) that deserve your attention before going any further with your analysis.
But note: Chuanglian 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 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.