Insiders who bought CN¥8.7m worth of CStone Pharmaceuticals' (HKG:2616) stock at an average buy price of CN¥4.05 over the last year may be disappointed by the recent 9.5% decrease in the stock. 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¥7.4m, which is not great.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for CStone Pharmaceuticals

The Last 12 Months Of Insider Transactions At CStone Pharmaceuticals

In the last twelve months, the biggest single purchase by an insider was when CEO, Senior VP & Chief Medical Officer Jianxin Yang bought HK$3.4m worth of shares at a price of HK$4.31 per share. That means that even when the share price was higher than HK$3.44 (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. Jianxin Yang was the only individual insider to buy shares in the last twelve months. We note that Jianxin Yang was both the biggest buyer and the biggest seller.

Jianxin Yang bought a total of 2.14m shares over the year at an average price of HK$4.05. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Does CStone Pharmaceuticals Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. CStone Pharmaceuticals insiders own about HK$158m worth of shares. That equates to 3.6% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About CStone Pharmaceuticals Insiders?

The fact that there have been no CStone Pharmaceuticals insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like CStone Pharmaceuticals insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing CStone Pharmaceuticals. Case in point: We've spotted 2 warning signs for CStone Pharmaceuticals you should be aware of.

But note: CStone Pharmaceuticals may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.