Zhongzhi Pharmaceutical Holdings Limited (HKG:3737) shareholders (or potential shareholders) will be happy to see that the Chairman, Zhi Tian Lai, recently bought a whopping HK$4.0m worth of stock, at a price of HK$1.18. While that only increased their holding size by 0.7%, it is still a big swing by our standards.
Zhongzhi Pharmaceutical Holdings Insider Transactions Over The Last Year
Notably, that recent purchase by Zhi Tian Lai is the biggest insider purchase of Zhongzhi Pharmaceutical Holdings shares that we've seen in the last year. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$1.16). Their view may have changed since then, but at least it shows they felt optimistic at the time. 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. The only individual insider to buy over the last year was Zhi Tian Lai.
Zhi Tian Lai bought 7.16m shares over the last 12 months at an average price of HK$1.27. 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!
Zhongzhi Pharmaceutical Holdings 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.
Insider Ownership Of Zhongzhi Pharmaceutical Holdings
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. Zhongzhi Pharmaceutical Holdings insiders own about HK$639m worth of shares (which is 64% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Zhongzhi Pharmaceutical Holdings Tell Us?
It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Zhongzhi Pharmaceutical Holdings insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! 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. Every company has risks, and we've spotted 1 warning sign for Zhongzhi Pharmaceutical Holdings you should know about.
Of course Zhongzhi Pharmaceutical Holdings 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.