Insider Purchases Worth HK$8.97m See Losses As Coolpoint Innonism Holding Market Value Drops To HK$131m

The recent 20% drop in Coolpoint Innonism Holding Limited's (HKG:8040) stock could come as a blow to insiders who purchased HK$8.97m worth of stock at an average buy price of HK$0.55 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only HK$6.28m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Coolpoint Innonism Holding

Coolpoint Innonism Holding Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Yi-Sung Chen for HK$9.0m worth of shares, at about HK$0.55 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.39). Their view may have changed since then, but at least it shows they felt optimistic at the time. 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. The only individual insider to buy over the last year was Yi-Sung Chen.

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!

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.

Insiders At Coolpoint Innonism Holding Have Bought Stock Recently

There has been significantly more insider buying, than selling, at Coolpoint Innonism Holding, over the last three months. We can see that insider Yi-Sung Chen paid HK$9.0m for shares in the company. But we did see Executive Director Chi-wai Lee sell shares worth HK$75k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 20% of Coolpoint Innonism Holding shares, worth about HK$26m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Coolpoint Innonism Holding Insiders?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Insiders likely see value in Coolpoint Innonism Holding shares, given these transactions (along with notable insider ownership of the company). So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 2 warning signs for Coolpoint Innonism Holding you should be aware of, and 1 of them is a bit unpleasant.

Of course Coolpoint Innonism Holding may not be the best stock to buy. So you may wish to see this free collection of high quality 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 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.