Cosmo Lady (China) Holdings Company Limited (HKG:2298) Insiders Increased Their Holdings

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Cosmo Lady (China) Holdings Company Limited (HKG:2298).

Do Insider Transactions Matter?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

View our latest analysis for Cosmo Lady (China) Holdings

Cosmo Lady (China) Holdings Insider Transactions Over The Last Year

The Deputy Chairman & VP Shengfeng Zhang made the biggest insider purchase in the last 12 months. That single transaction was for HK$1.1m worth of shares at a price of HK$0.46 each. We do like to see buying, but this purchase was made at well below the current price of HK$1.30. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

In the last twelve months Cosmo Lady (China) Holdings insiders were buying shares, but not selling. They paid about HK$0.52 on average. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Cosmo Lady (China) 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.

Insiders at Cosmo Lady (China) Holdings Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Cosmo Lady (China) Holdings. In total, insiders bought HK$1.1m worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.

Does Cosmo Lady (China) 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 18% of Cosmo Lady (China) Holdings shares, worth about HK$529m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Cosmo Lady (China) Holdings Tell Us?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Cosmo Lady (China) Holdings insiders are well aligned, and quite possibly think the share price is too low. Looks promising! 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 1 warning sign for Cosmo Lady (China) Holdings you should be aware of.

But note: Cosmo Lady (China) 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, but not derivative transactions.

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This article by Simply Wall St is general in nature. 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.
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