The recent 15% drop in China ZhengTong Auto Services Holdings Limited's (HKG:1728) stock could come as a blow to insiders who purchased CN¥1.90m worth of stock at an average buy price of CN¥0.24 over the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth CN¥1.37m, which is not what they expected.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
View our latest analysis for China ZhengTong Auto Services Holdings
China ZhengTong Auto Services Holdings Insider Transactions Over The Last Year
The insider Mui Cheung made the biggest insider purchase in the last 12 months. That single transaction was for HK$1.9m worth of shares at a price of HK$0.24 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.17). 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. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Mui Cheung was the only individual insider to buy during the last year.
You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
China ZhengTong Auto Services Holdings is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.
Insider Ownership Of China ZhengTong Auto Services Holdings
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. From our data, it seems that China ZhengTong Auto Services Holdings insiders own 11% of the company, worth about HK$54m. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
So What Does This Data Suggest About China ZhengTong Auto Services Holdings Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in China ZhengTong Auto Services Holdings and their transactions don't cause us concern. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. While conducting our analysis, we found that China ZhengTong Auto Services Holdings has 2 warning signs and it would be unwise to ignore these.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
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