The recent 7.8% drop in New Horizon Health Limited's (HKG:6606) stock could come as a blow to insiders who purchased CN¥128m worth of stock at an average buy price of CN¥30.45 over the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth CN¥67m, which is not what they expected.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for New Horizon Health

New Horizon Health Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Siu Hang Mak for HK$99m worth of shares, at about HK$31.15 per share. That means that even when the share price was higher than HK$16.00 (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. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Siu Hang Mak was the only individual insider to buy shares in the last twelve months.

Siu Hang Mak purchased 4.21m shares over the year. The average price per share was HK$30.45. 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!

New Horizon Health is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Does New Horizon Health Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. New Horizon Health insiders own about HK$1.4b worth of shares (which is 20% of the company). 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 New Horizon Health Tell Us?

The fact that there have been no New Horizon Health insider transactions recently certainly doesn't bother us. 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 New Horizon Health 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. While conducting our analysis, we found that New Horizon Health has 2 warning signs and it would be unwise to ignore these.

Of course New Horizon Health 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, but not derivative transactions.

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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.