The recent 7.1% drop in Zall Smart Commerce Group Ltd.'s (HKG:2098) stock could come as a blow to insiders who purchased CN¥651m worth of stock at an average buy price of CN¥0.50 over the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth CN¥599m, which is not great.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Zall Smart Commerce Group

The Last 12 Months Of Insider Transactions At Zall Smart Commerce Group

The Founder Zhi Yan made the biggest insider purchase in the last 12 months. That single transaction was for HK$317m worth of shares at a price of HK$0.50 each. That means that an insider was happy to buy shares at above the current price of HK$0.46. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for 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.

Over the last year, we can see that insiders have bought 1.30b shares worth HK$651m. But insiders sold 10.40m shares worth HK$5.0m. In total, Zall Smart Commerce 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 want to know exactly who sold, for how much, and when, simply click on the graph below!

Zall Smart Commerce Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Zall Smart Commerce Group Insiders Bought Stock Recently

At Zall Smart Commerce Group,over the last quarter, we have observed quite a lot more insider buying than insider selling. Insiders spent HK$351m on shares. But we did see Co-Chairman Gang Yu sell shares worth HK$5.0m. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

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. Zall Smart Commerce Group insiders own about HK$4.1b worth of shares (which is 71% 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.

So What Do The Zall Smart Commerce Group Insider Transactions Indicate?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Zall Smart Commerce Group insiders are well aligned, and quite possibly think the share price is too low. Nice! While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 3 warning signs for Zall Smart Commerce Group (2 don't sit too well with us!) that we believe deserve your full attention.

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, 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.