Insiders Re-Evaluate Their S$43.9m Stock Purchase As Zhongshi Minan Holdings Falls To HK$168m

Insiders who acquired S$43.9m worth of Zhongshi Minan Holdings Limited's (HKG:8283) stock at an average price of S$0.093 in the past 12 months may be dismayed by the recent 12% price decline. 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 S$39.5m.

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 Zhongshi Minan Holdings

Zhongshi Minan Holdings Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Executive Co-Chairman & CEO Lei Wang bought HK$30m worth of shares at a price of HK$0.10 per share. That means that even when the share price was higher than HK$0.084 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. The only individual insider to buy over the last year was Lei Wang.

Lei Wang purchased 470.06m shares over the year. The average price per share was HK$0.093. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Zhongshi Minan Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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. Zhongshi Minan Holdings insiders own about HK$99m worth of shares (which is 59% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Zhongshi Minan Holdings Tell Us?

The fact that there have been no Zhongshi Minan Holdings insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Zhongshi Minan Holdings 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. While conducting our analysis, we found that Zhongshi Minan Holdings has 1 warning sign and it would be unwise to ignore this.

Of course Zhongshi Minan Holdings 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.