Did Impro Precision Industries Limited (HKG:1286) Insiders Buy Up More Shares?

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 shareholders might well want to know whether insiders have been buying or selling shares in Impro Precision Industries Limited (HKG:1286).

What Is Insider Buying?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. 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'.

Check out our latest analysis for Impro Precision Industries

Impro Precision Industries Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Chairman & CEO Ruibo Lu bought HK$3.0m worth of shares at a price of HK$2.95 per share. That means that an insider was happy to buy shares at above the current price of HK$2.85. 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 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. Ruibo Lu was the only individual insider to buy shares in the last twelve months.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart 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

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Impro Precision Industries insiders own 61% of the company, worth about HK$3.3b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Impro Precision Industries Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Impro Precision Industries shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, Impro Precision Industries insiders feel good about the company's future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Impro Precision Industries. To that end, you should learn about the 2 warning signs we've spotted with Impro Precision Industries (including 1 which shouldn't be ignored).

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.

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