Changyou Alliance Group's Market Cap Drops To HK$208m Leaving Insiders With Losses

Insiders who acquired CN¥5.45m worth of Changyou Alliance Group Limited's (HKG:1039) stock at an average price of CN¥0.15 in the past 12 months may be dismayed by the recent 10% price decline. 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¥4.07m, 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, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Changyou Alliance Group

Changyou Alliance Group Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Tang Pun for HK$5.4m worth of shares, at about HK$0.15 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.12). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for 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. The only individual insider to buy over the last year was Tang Pun.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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

Insider Ownership

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. Changyou Alliance Group insiders own about HK$94m worth of shares (which is 45% 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.

So What Does This Data Suggest About Changyou Alliance Group Insiders?

It doesn't really mean much that no insider has traded Changyou Alliance Group shares in the last quarter. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, Changyou Alliance Group insiders feel good about the company's future. 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 Changyou Alliance Group you should be aware of, and 1 of these is concerning.

Of course Changyou Alliance 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.