Insiders who bought CN¥4.49m worth of China MeiDong Auto Holdings Limited (HKG:1268) stock in the last year have seen some of their losses recouped as the stock gained 14% 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 CN¥1.8m 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.
Check out our latest analysis for China MeiDong Auto Holdings
The Last 12 Months Of Insider Transactions At China MeiDong Auto Holdings
The Founder & Chairman Fan Ye made the biggest insider purchase in the last 12 months. That single transaction was for HK$3.7m worth of shares at a price of HK$3.75 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$2.27). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing 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. Fan Ye was the only individual insider to buy shares in the last twelve months.
Fan Ye bought 1.20m shares over the last 12 months at an average price of HK$3.73. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insider Ownership Of China MeiDong Auto 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 MeiDong Auto Holdings insiders own about HK$1.6b worth of shares (which is 53% 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.
What Might The Insider Transactions At China MeiDong Auto Holdings Tell Us?
It doesn't really mean much that no insider has traded China MeiDong Auto Holdings shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. With high insider ownership and encouraging transactions, it seems like China MeiDong Auto Holdings insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing China MeiDong Auto Holdings. While conducting our analysis, we found that China MeiDong Auto Holdings has 2 warning signs and it would be unwise to ignore them.
But note: China MeiDong Auto 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com