Kato (Hong Kong) Holdings Limited (HKG:2189) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 11%, resulting in a HK$50m rise in the company's market capitalisation, translating to a gain of 14% on their initial investment. As a result, the stock they originally bought for HK$6.32m is now worth HK$7.20m.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
Kato (Hong Kong) Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by CEO & Executive Chairman of the Board Shi Shing Ngai for HK$2.2m worth of shares, at about HK$0.45 per share. We do like to see buying, but this purchase was made at well below the current price of HK$0.52. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Shi Shing Ngai bought a total of 13.85m shares over the year at an average price of HK$0.46. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
See our latest analysis for Kato (Hong Kong) 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.
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It's great to see that Kato (Hong Kong) Holdings insiders own 71% of the company, worth about HK$370m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Kato (Hong Kong) Holdings Tell Us?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Kato (Hong Kong) Holdings insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Kato (Hong Kong) Holdings. Every company has risks, and we've spotted 3 warning signs for Kato (Hong Kong) Holdings (of which 1 doesn't sit too well with us!) you should know about.
Of course Kato (Hong Kong) Holdings 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.