Investors who take an interest in Zhongzhi Pharmaceutical Holdings Limited (HKG:3737) should definitely note that the Chairman, Zhi Tian Lai, recently paid HK$1.00 per share to buy HK$839k worth of the stock. Although the purchase is not a big one, by either a percentage standpoint or absolute value, it can be seen as a good sign.
View our latest analysis for Zhongzhi Pharmaceutical Holdings
The Last 12 Months Of Insider Transactions At Zhongzhi Pharmaceutical Holdings
Notably, that recent purchase by Chairman Zhi Tian Lai was not the only time they bought Zhongzhi Pharmaceutical Holdings shares this year. Earlier in the year, they paid HK$1.20 per share in a HK$6.0m purchase. That means that an insider was happy to buy shares at above the current price of HK$1.01. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Zhi Tian Lai was the only individual insider to buy during the last year.
Zhi Tian Lai purchased 26.91m shares over the year. The average price per share was HK$1.19. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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.
Does Zhongzhi Pharmaceutical Holdings 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. Zhongzhi Pharmaceutical Holdings insiders own 66% of the company, currently worth about HK$579m 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 Do The Zhongzhi Pharmaceutical Holdings Insider Transactions Indicate?
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Zhongzhi Pharmaceutical Holdings. That's what I like to see! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - Zhongzhi Pharmaceutical Holdings has 1 warning sign we think you should be aware of.
But note: Zhongzhi Pharmaceutical Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.