Did Central China Securities Co., Ltd. (HKG:1375) Insiders Buy Up More Shares?

We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Central China Securities Co., Ltd. (HKG:1375).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

Check out our latest analysis for Central China Securities

The Last 12 Months Of Insider Transactions At Central China Securities

In the last twelve months, the biggest single purchase by an insider was when President & Executive Vice Chairman Junsheng Chang bought HK$844k worth of shares at a price of HK$1.12 per share. We do like to see buying, but this purchase was made at well below the current price of HK$1.49. 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.

Junsheng Chang bought a total of 1.00m shares over the year at an average price of HK$1.13. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data suggests Central China Securities insiders own 0.05% of the company, worth about HK$11m. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. I generally like to see higher levels of ownership.

So What Does This Data Suggest About Central China Securities Insiders?

It doesn't really mean much that no insider has traded Central China Securities shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Central China Securities and we see no evidence to suggest they are worried about the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Central China Securities is showing 3 warning signs in our investment analysis, and 2 of those are concerning...

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, but not derivative transactions.

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