It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in China Metal Resources Utilization Limited (HKG:1636).
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
The Last 12 Months Of Insider Transactions At China Metal Resources Utilization
In the last twelve months, the biggest single purchase by an insider was when Founder Jianqiu Yu bought HK$2.6m worth of shares at a price of HK$3.81 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$3.34). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Jianqiu Yu was the only individual insider to buy over the year. We note that Jianqiu Yu was both the biggest buyer and the biggest seller.
Jianqiu Yu purchased 4.02m shares over the year. The average price per share was HK$3.81. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
China Metal Resources Utilization is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership of China Metal Resources Utilization
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. China Metal Resources Utilization insiders own about HK$4.5b worth of shares (which is 51% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At China Metal Resources Utilization Tell Us?
The fact that there have been no China Metal Resources Utilization insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, China Metal Resources Utilization insiders feel good about the company's future. Along with insider transactions, I recommend checking if China Metal Resources Utilization is growing revenue. This free chart of historic revenue and earnings should make that easy.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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