FEG Holdings Up 15%, Insiders Still In The Red By HK$4.4m

Insiders who purchased HK$13.9m worth of FEG Holdings Corporation Limited (HKG:1413) shares over the past year recouped some of their losses after price gained 15% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled HK$4.4m since the time of purchase.

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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FEG Holdings Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Executive Chairman Tung Tsun Cheung bought HK$8.9m worth of shares at a price of HK$0.12 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.078). 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. 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. Tung Tsun Cheung was the only individual insider to buy shares in the last twelve months.

Tung Tsun Cheung purchased 121.16m shares over the year. The average price per share was HK$0.11. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for FEG Holdings

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

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 11% of FEG Holdings shares, worth about HK$10m, according to our data. We do generally prefer see higher levels of insider ownership.

So What Do The FEG Holdings Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in FEG Holdings and their transactions don't cause us concern. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Be aware that FEG Holdings is showing 6 warning signs in our investment analysis, and 2 of those are a bit unpleasant...

But note: FEG Holdings 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 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.