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Imagine Owning Major Holdings (HKG:1389) And Taking A 96% Loss Square On The Chin

Simply Wall St

While not a mind-blowing move, it is good to see that the Major Holdings Limited (HKG:1389) share price has gained 28% in the last three months. But that is meagre solace in the face of the shocking decline over three years. Indeed, the share price is down a whopping 96% in the last three years. So we're relieved for long term holders to see a bit of uplift. Of course the real question is whether the business can sustain a turnaround.

We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

View our latest analysis for Major Holdings

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Major Holdings saw its share price decline over the three years in which its EPS also dropped, falling to a loss. Due to the loss, it's not easy to use EPS as a reliable guide to the business. But it's safe to say we'd generally expect the share price to be lower as a result!

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

SEHK:1389 Past and Future Earnings, September 22nd 2019

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on Major Holdings's earnings, revenue and cash flow.


What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Major Holdings's total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Dividends have been really beneficial for Major Holdings shareholders, and that cash payout explains why its total shareholder loss of 96%, over the last 3 years, isn't as bad as the share price return.

A Different Perspective

The total return of 5.7% received by Major Holdings shareholders over the last year isn't far from the market return of -6.2%. However, the loss over the last year isn't as bad as the 11% per annum loss investors have suffered over the last half decade. Generally speaking we'd prefer see an improvement in the fundamental metrics before becoming enthusiastic about the stock. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.