Wai Chun Bio-Technology Limited (HKG:660) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 19%, resulting in a HK$18m rise in the company's market capitalisation. As a result, the stock they originally bought for HK$1.1m is now worth HK$1.5m.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
The Last 12 Months Of Insider Transactions At Wai Chun Bio-Technology
In the last twelve months, the biggest single purchase by an insider was when Executive Chairman & CEO Ching Kui Lam bought HK$1.1m worth of shares at a price of HK$0.05 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of HK$0.068. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
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!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Does Wai Chun Bio-Technology Boast High Insider Ownership?
Many investors like to check how much of a company is owned by 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 Wai Chun Bio-Technology insiders own 85% of the company, worth about HK$97m. 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 Wai Chun Bio-Technology Insiders?
The fact that there have been no Wai Chun Bio-Technology 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 Wai Chun Bio-Technology insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Wai Chun Bio-Technology. Our analysis shows 3 warning signs for Wai Chun Bio-Technology (2 are potentially serious!) and we strongly recommend you look at them before investing.
But note: Wai Chun Bio-Technology 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.
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.
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