The recent 13% drop in Zhixin Group Holding Limited's (HKG:2187) stock could come as a blow to insiders who purchased CN¥370m worth of stock at an average buy price of CN¥6.17 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 CN¥219m which is not ideal.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Zhixin Group Holding

The Last 12 Months Of Insider Transactions At Zhixin Group Holding

In the last twelve months, the biggest single purchase by an insider was when insider Yiyang Lai bought HK$192m worth of shares at a price of HK$6.41 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$3.65). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

In the last twelve months insiders purchased 59.98m shares for HK$370m. On the other hand they divested 12.89m shares, for HK$81m. In the last twelve months there was more buying than selling by Zhixin Group Holding insiders. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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.

Zhixin Group Holding Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Zhixin Group Holding. In total, Executive Director Kaining Huang dumped HK$16m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership Of Zhixin Group Holding

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. Zhixin Group Holding insiders own 68% of the company, currently worth about HK$1.9b based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Zhixin Group Holding Insider Transactions Indicate?

An insider sold Zhixin Group Holding shares recently, but they didn't buy any. On the other hand, the insider transactions over the last year are encouraging. On top of that, insiders own a significant portion of the company. So we're not too bothered by recent selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Zhixin Group Holding. Our analysis shows 5 warning signs for Zhixin Group Holding (3 are concerning!) and we strongly recommend you look at these before investing.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.