Insiders Give Up HK$1.3m As Madison Holdings Group Stock Drops To HK$0.15

Insiders who acquired HK$1.72m worth of Madison Holdings Group Limited's (HKG:8057) stock at an average price of HK$0.57 in the past 12 months may be dismayed by the recent 22% price decline. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth HK$458.0k which is not ideal.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Madison Holdings Group

The Last 12 Months Of Insider Transactions At Madison Holdings Group

In the last twelve months, the biggest single purchase by an insider was when insider Pang Ting bought HK$1.2m worth of shares at a price of HK$0.56 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). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. 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. Pang Ting was the only individual insider to buy during the last year.

Pang Ting bought a total of 3.01m shares over the year at an average price of HK$0.57. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

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

Does Madison Holdings Group 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. Madison Holdings Group insiders own about HK$26m worth of shares. That equates to 28% 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 Madison Holdings Group Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Madison Holdings Group and their transactions don't cause us concern. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 2 warning signs for Madison Holdings Group you should be aware of, and 1 of them is potentially serious.

Of course Madison Holdings Group 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.