Insiders who purchased this year lose CN¥1.4m as China Beststudy Education Group (HKG:3978) stock drops to HK$0.23

By
Simply Wall St
Published
April 13, 2022
SEHK:3978
Source: Shutterstock

The recent 11% drop in China Beststudy Education Group's (HKG:3978) stock could come as a blow to insiders who purchased CN¥1.5m worth of stock at an average buy price of CN¥2.25 over the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth CN¥156k, which is not great.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for China Beststudy Education Group

The Last 12 Months Of Insider Transactions At China Beststudy Education Group

Over the last year, we can see that the biggest insider purchase was by insider Shaoping Fu for HK$1.1m worth of shares, at about HK$2.47 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.23). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. 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. Notably Shaoping Fu was also the biggest seller.

In the last twelve months insiders purchased 674.00k shares for HK$1.5m. On the other hand they divested 1.64m shares, for HK$852k. In total, China Beststudy Education Group insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
SEHK:3978 Insider Trading Volume April 13th 2022

China Beststudy Education Group 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 of China Beststudy Education Group

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that China Beststudy Education Group insiders own 78% of the company, worth about HK$134m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About China Beststudy Education Group Insiders?

The fact that there have been no China Beststudy Education Group insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like China Beststudy Education Group insiders think the business has merit. 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. Be aware that China Beststudy Education Group is showing 3 warning signs in our investment analysis, and 1 of those is concerning...

But note: China Beststudy Education Group 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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