We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Huazhang Technology Holding Limited (HKG:1673), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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 Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Huazhang Technology Holding Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chairman & President Gen Rong Zhu for HK$7.2m worth of shares, at about HK$3.60 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$3.40). Their view may have changed since then, but at least it shows they felt optimistic at the time. 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.
Huazhang Technology Holding insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
Huazhang Technology Holding 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.
Huazhang Technology Holding Insiders Bought Stock Recently
It's good to see that Huazhang Technology Holding insiders have made notable investments in the company's shares. Chairman & President Gen Rong Zhu spent CN¥13m on stock, and there wasn't any selling. That shows some optimism about the company's future.
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. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data suggests Huazhang Technology Holding insiders own 1.6% of the company, worth about HK$39m. However, it's possible that insiders might have an indirect interest through a more complex structure. We consider this fairly low insider ownership.
What Might The Insider Transactions At Huazhang Technology Holding Tell Us?
It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Huazhang Technology Holding insiders are well aligned, and that they may think the share price is too low. Along with insider transactions, I recommend checking if Huazhang Technology Holding is growing revenue. This free chart of historic revenue and earnings should make that easy.
But note: Huazhang Technology Holding 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, but not derivative transactions.
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 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. Thank you for reading.