The recent price decline of 31% in CStone Pharmaceuticals' (HKG:2616) stock may have disappointed insiders who bought CN¥6.54m worth of shares at an average price of CN¥2.52 in the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth CN¥2.93m which is not ideal.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
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$1.1m worth of shares at a price of HK$2.48 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$1.13). 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.
Jianxin Yang bought 2.59m shares over the last 12 months at an average price of HK$2.52. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
CStone Pharmaceuticals is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data indicates that CStone Pharmaceuticals insiders own about HK$55m worth of shares (which is 3.8% of the company). Whilst better than nothing, we're not overly impressed by these holdings.
So What Do The CStone Pharmaceuticals Insider Transactions Indicate?
It doesn't really mean much that no insider has traded CStone Pharmaceuticals shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Overall we don't see anything to make us think CStone Pharmaceuticals insiders are doubting the company, and they do own shares. 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. You'd be interested to know, that we found 2 warning signs for CStone Pharmaceuticals and we suggest you have a look.
Of course CStone Pharmaceuticals may not be the best stock to buy. So you may wish to see this free collection of high quality 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 of direct interests only, but not derivative transactions or indirect interests.
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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.