Insiders who bought HK$1.6m worth of China Water Affairs Group Limited (HKG:855) stock in the last year recovered part of their losses as the stock rose by 6.1% last week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at HK$563k 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.

View our latest analysis for China Water Affairs Group

China Water Affairs Group Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Executive Chairman Chuan Liang Duan for HK$1.6m worth of shares, at about HK$10.38 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$6.77). 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. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Chuan Liang Duan was the only individual insider to buy during the last year.

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!

China Water Affairs Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Does China Water Affairs Group Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. China Water Affairs Group insiders own 33% of the company, currently worth about HK$3.7b 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 Does This Data Suggest About China Water Affairs Group Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like China Water Affairs Group insiders think the business has merit. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 2 warning signs for China Water Affairs Group (1 is potentially serious) you should be aware of.

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.