The recent price decline of 4.9% in China Overseas Grand Oceans Group Limited's (HKG:81) stock may have disappointed insiders who bought CN¥1.9m worth of shares at an average price of CN¥3.83 in 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¥1.8m, 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.
See our latest analysis for China Overseas Grand Oceans Group
China Overseas Grand Oceans Group Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Executive Chairman of the Board Yong Zhuang for HK$967k worth of shares, at about HK$3.87 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$3.67). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. 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. Yong Zhuang was the only individual insider to buy during the last year.
Yong Zhuang bought a total of 500.00k shares over the year at an average price of HK$3.83. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!SEHK:81 Insider Trading Volume August 2nd 2022
China Overseas Grand Oceans Group is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Does China Overseas Grand Oceans Group Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. China Overseas Grand Oceans Group insiders own about HK$1.5b worth of shares (which is 12% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About China Overseas Grand Oceans Group Insiders?
It doesn't really mean much that no insider has traded China Overseas Grand Oceans Group shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, China Overseas Grand Oceans Group insiders feel good about the company's future. 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. For example, China Overseas Grand Oceans Group has 3 warning signs (and 2 which are potentially serious) we think you should know about.
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.
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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.