Quite a few insiders have dramatically grown their holdings in China Education Group Holdings Limited (HKG:839) over the past 12 months. An insider's optimism about the company's prospects is a positive sign.
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 China Education Group Holdings
In the last twelve months, the biggest single purchase by an insider was when Executive Co-Chairman Guo Yu bought HK$229m worth of shares at a price of HK$4.01 per share. Even though the purchase was made at a significantly lower price than the recent price (HK$4.75), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
While China Education Group Holdings insiders bought shares during the last year, they didn't sell. They paid about HK$4.45 on average. Although they bought at below the recent share price, it is good to see that insiders are willing to invest in the company. 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!
China Education Group Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
China Education Group Holdings Insiders Bought Stock Recently
It's good to see that China Education Group Holdings insiders have made notable investments in the company's shares. In total, insiders bought HK$457m worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.
Insider Ownership Of China Education Group 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. A high insider ownership often makes company leadership more mindful of shareholder interests. China Education Group Holdings insiders own about HK$7.6b worth of shares (which is 61% 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 Education Group Holdings Insiders?
The recent insider purchases are heartening. And an analysis of the transactions over the last year also gives us confidence. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about China Education Group Holdings. That's what I like to see! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of China Education Group Holdings.
But note: China Education Group Holdings 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 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.