Insiders who bought HK$6.3m worth of Shoucheng Holdings Limited (HKG:697) stock in the last year recovered part of their losses as the stock rose by 7.8% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled HK$1.3m since the time of purchase.
While insider transactions are not the most important thing when it comes to long-term investing , we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for Shoucheng Holdings
Shoucheng Holdings Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Non-Executive Director Jingwei Liu bought HK$1.3m worth of shares at a price of HK$1.68 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$1.24). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. 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. We note that Jingwei Liu was both the biggest buyer and the biggest seller.
Over the last year, we can see that insiders have bought 4.03m shares worth HK$6.3m. On the other hand they divested 60.00k shares, for HK$64k. In the last twelve months there was more buying than selling by Shoucheng Holdings insiders. 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!SEHK:697 Insider Trading Volume July 19th 2022
Shoucheng Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Shoucheng Holdings Insiders Bought Stock Recently
Over the last three months, we've seen a bit of insider buying at Shoucheng Holdings. In that period Executive Chairman of the Board Tianyang Zhao spent HK$343k on shares. On the other hand, Non-Executive Director Jingwei Liu sold HK$64k worth of shares. It is good to see that insiders have been buying, but they did not buy very many shares, in the scheme of things.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. From looking at our data, insiders own HK$9.6m worth of Shoucheng Holdings stock, about 0.1% of the company. But they may have an indirect interest through a corporate structure that we haven't picked up on. We prefer to see high levels of insider ownership.
So What Do The Shoucheng Holdings Insider Transactions Indicate?
It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Shoucheng Holdings insiders are expecting a bright 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. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of Shoucheng Holdings.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, but not derivative transactions.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.