AInnovation Technology Group Co., Ltd (HKG:2121) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 17%, resulting in a HK$308m rise in the company's market capitalisation, translating to a gain of 26% on their initial investment. Put another way, the original CN¥22.2m acquisition is now worth CN¥28.0m.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for AInnovation Technology Group
The Last 12 Months Of Insider Transactions At AInnovation Technology Group
Over the last year, we can see that the biggest insider purchase was by CEO & Executive Director Hui Xu for HK$22m worth of shares, at about HK$3.06 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of HK$3.86. 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.
Happily, we note that in the last year insiders paid HK$22m for 7.26m shares. On the other hand they divested 1.94m shares, for HK$11m. In the last twelve months there was more buying than selling by AInnovation Technology Group insiders. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
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. We usually like to see fairly high levels of insider ownership. It appears that AInnovation Technology Group insiders own 18% of the company, worth about HK$383m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The AInnovation Technology Group Insider Transactions Indicate?
The fact that there have been no AInnovation Technology 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 AInnovation Technology Group insiders think the business has merit. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that AInnovation Technology Group has 2 warning signs and it would be unwise to ignore these.
Of course AInnovation Technology Group 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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