Chairman of Far East Hotels and Entertainment Derek Chiu Buys 1.4% More Shares

Investors who take an interest in Far East Hotels and Entertainment Limited (HKG:37) should definitely note that the Chairman, Derek Chiu, recently paid HK$0.50 per share to buy HK$1.2m worth of the stock. Although the purchase only increased their holding by 1.4%, it is still a solid purchase in our view.

View our latest analysis for Far East Hotels and Entertainment

Far East Hotels and Entertainment Insider Transactions Over The Last Year

In fact, the recent purchase by Chairman Derek Chiu was not their only acquisition of Far East Hotels and Entertainment shares this year. They previously made an even bigger purchase of HK$6.8m worth of shares at a price of HK$1.13 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.49). 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. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

While Far East Hotels and Entertainment 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!

Far East Hotels and Entertainment is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 28% of Far East Hotels and Entertainment shares, worth about HK$102m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Far East Hotels and Entertainment Insider Transactions Indicate?

It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Far East Hotels and Entertainment. Looks promising! So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example - Far East Hotels and Entertainment has 2 warning signs we think you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.

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

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.