Ziyuanyuan Holdings Group Limited (HKG:8223) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 11% resulting in a HK$129m addition to the company’s market value. In other words, the original CN¥19.8m purchase is now worth CN¥44.3m.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
View our latest analysis for Ziyuanyuan Holdings Group
Ziyuanyuan Holdings Group Insider Transactions Over The Last Year
The Executive Director Zhiwei Tian made the biggest insider purchase in the last 12 months. That single transaction was for HK$20m worth of shares at a price of HK$1.32 each. Even though the purchase was made at a significantly lower price than the recent price (HK$2.95), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
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!
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 Ziyuanyuan Holdings Group
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Ziyuanyuan Holdings Group insiders own 73% of the company, currently worth about HK$929m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Ziyuanyuan Holdings Group Insiders?
It's certainly positive 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 Ziyuanyuan Holdings Group 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. Be aware that Ziyuanyuan Holdings Group is showing 4 warning signs in our investment analysis, and 2 of those are significant...
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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