Insiders made the right call by buying CN¥2.5m Zhihu Inc. (NYSE:ZH) stock this year, currently sit on CN¥103k profit
Zhihu Inc. (NYSE:ZH) insiders who acquired shares over the previous 12 months, can probably afford to ignore the recent 7.7% decline in the stock price. Reason being, despite the recent loss, insiders original purchase value of CN¥2.5m is now worth CN¥2.7m.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
See our latest analysis for Zhihu
Zhihu Insider Transactions Over The Last Year
The insider Leonard Blavatnik made the biggest insider purchase in the last 12 months. That single transaction was for US$2.5m worth of shares at a price of US$1.52 each. That means that even when the share price was higher than US$1.43 (the recent price), an insider wanted to purchase shares. 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. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Leonard Blavatnik was the only individual insider to buy shares in the last twelve months.
You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Zhihu 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
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Zhihu insiders own about US$178m worth of shares (which is 20% of the company). 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 Does This Data Suggest About Zhihu Insiders?
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Zhihu. That's what I like to see! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Zhihu. While conducting our analysis, we found that Zhihu has 3 warning signs and it would be unwise to ignore them.
But note: Zhihu 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.
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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.
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