Star Entertainment Group's Market Cap Drops To AU$264m Leaving Insiders With Losses

Insiders who bought AU$41.2m worth of The Star Entertainment Group Limited's (ASX:SGR) stock at an average buy price of AU$0.22 over the last year may be disappointed by the recent 20% decrease in the stock. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth AU$17.2m, which is not great.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

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Star Entertainment Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Xingchun Wang bought AU$38m worth of shares at a price of AU$0.29 per share. That means that even when the share price was higher than AU$0.092 (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. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Xingchun Wang was the only individual insider to buy shares in the last twelve months.

Xingchun Wang bought 186.99m shares over the last 12 months at an average price of AU$0.22. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

View our latest analysis for Star Entertainment Group

Star Entertainment Group is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Does Star Entertainment Group Boast High Insider Ownership?

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. Insiders own 18% of Star Entertainment Group shares, worth about AU$46m. 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 Star Entertainment Group Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Star Entertainment Group and their transactions don't cause us concern. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Star Entertainment Group has 1 warning sign and it would be unwise to ignore it.

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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 of direct interests only, but not derivative transactions or indirect interests.

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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.