The recent price decline of 14% in Optima Automobile Group Holdings Limited's (HKG:8418) stock may have disappointed insiders who bought S$61.2m worth of shares at an average price of S$0.91 in 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 S$43.5m, which is not what they expected.
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.
See our latest analysis for Optima Automobile Group Holdings
The Last 12 Months Of Insider Transactions At Optima Automobile Group Holdings
The Executive Chairman of the Board Wu’an Hu made the biggest insider purchase in the last 12 months. That single transaction was for HK$44m worth of shares at a price of HK$0.90 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.65). 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. 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 if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Happily, we note that in the last year insiders paid HK$61m for 66.98m shares. But insiders sold 12.85m shares worth HK$5.8m. Overall, Optima Automobile Group Holdings insiders were net buyers during the last year. 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!
Optima Automobile Group 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.
Does Optima Automobile Group Holdings Boast High 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. Optima Automobile Group Holdings insiders own about HK$80m worth of shares. That equates to 15% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Optima Automobile Group Holdings Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Optima Automobile Group Holdings and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Optima Automobile Group Holdings. Be aware that Optima Automobile Group Holdings is showing 3 warning signs in our investment analysis, and 1 of those is a bit concerning...
Of course Optima Automobile Group 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.
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