Insiders who bought US$358.7m worth of Xin Yuan Enterprises Group Limited (HKG:1748) stock in the last year have seen some of their losses recouped as the stock gained 26% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling US$60m.
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.
View our latest analysis for Xin Yuan Enterprises Group
The Last 12 Months Of Insider Transactions At Xin Yuan Enterprises Group
In the last twelve months, the biggest single purchase by an insider was when insider Liangquan Fan bought HK$202m worth of shares at a price of HK$4.85 per share. That means that even when the share price was higher than HK$4.04 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing 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$359m for 73.95m shares. On the other hand they divested 47.40m shares, for HK$230m. Overall, Xin Yuan Enterprises Group insiders were net buyers during the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Xin Yuan Enterprises Group is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
Does Xin Yuan Enterprises Group Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Xin Yuan Enterprises Group insiders own 65% of the company, currently worth about HK$1.2b 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.
What Might The Insider Transactions At Xin Yuan Enterprises Group Tell Us?
The fact that there have been no Xin Yuan Enterprises Group insider transactions recently certainly doesn't bother us. 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 Xin Yuan Enterprises Group insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Xin Yuan Enterprises Group. You'd be interested to know, that we found 1 warning sign for Xin Yuan Enterprises Group and we suggest you have a look.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.