Insider Purchases Worth RM33m See Losses As Heng Hup Holdings Market Value Drops To HK$150m

The recent price decline of 17% in Heng Hup Holdings Limited's (HKG:1891) stock may have disappointed insiders who bought RM33m worth of shares at an average price of RM0.28 in the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth RM17m, which is not what they expected.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Heng Hup Holdings

The Last 12 Months Of Insider Transactions At Heng Hup Holdings

Over the last year, we can see that the biggest insider purchase was by insider Ka Ho Poon for HK$16m worth of shares, at about HK$0.28 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.15). 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. Ka Ho Poon was the only individual insider to buy shares in the last twelve months.

Ka Ho Poon purchased 116.64m shares over the year. The average price per share was HK$0.28. 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!

Heng Hup Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Does Heng Hup Holdings 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. Heng Hup Holdings insiders own about HK$45m worth of shares. That equates to 30% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Heng Hup Holdings Insider Transactions Indicate?

The fact that there have been no Heng Hup Holdings insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Heng Hup Holdings and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Heng Hup Holdings. Our analysis shows 2 warning signs for Heng Hup Holdings (1 makes us a bit uncomfortable!) and we strongly recommend you look at these before investing.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.