Changsha Broad Homes Industrial Group Up 25%, Insiders Still Down After CN¥6.36m Purchase

Insiders who purchased CN¥6.36m worth of Changsha Broad Homes Industrial Group Co., Ltd. (HKG:2163) shares over the past year recouped some of their losses after price gained 25% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling CN¥3.5m.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Changsha Broad Homes Industrial Group

Changsha Broad Homes Industrial Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Founder Jian Zhang bought HK$2.5m worth of shares at a price of HK$2.66 per share. That means that an insider was happy to buy shares at above the current price of HK$1.21. 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. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While Changsha Broad Homes Industrial Group insiders bought shares during the last year, they didn't sell. 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!

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

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Changsha Broad Homes Industrial Group insiders own about HK$256m worth of shares (which is 43% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Changsha Broad Homes Industrial Group Insiders?

It doesn't really mean much that no insider has traded Changsha Broad Homes Industrial Group shares in the last quarter. However, our analysis of transactions over the last year is heartening. It would be great to see more insider buying, but overall it seems like Changsha Broad Homes Industrial Group insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 3 warning signs we've spotted with Changsha Broad Homes Industrial Group (including 1 which makes us a bit uncomfortable).

But note: Changsha Broad Homes Industrial Group 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com