Investors who take an interest in InvesTech Holdings Limited (HKG:1087) should definitely note that insider Yuen Sin Tin recently paid HK$0.19 per share to buy HK$1.6m worth of the stock. Although the purchase only increased their holding by 6.2%, it is still a solid purchase in our view.
InvesTech Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chairman & CEO Sek Keung Chan for HK$5.1m worth of shares, at about HK$0.21 per share. That means that an insider was happy to buy shares at above the current price of HK$0.20. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. 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.
InvesTech Holdings insiders may have bought shares in the last year, but they didn't sell any. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insider Ownership of InvesTech Holdings
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. InvesTech Holdings insiders own about HK$44m worth of shares. That equates to 16% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At InvesTech Holdings Tell Us?
It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Insiders likely see value in InvesTech Holdings shares, given these transactions (along with notable insider ownership of the company). To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.
Of course InvesTech Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality 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.
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