How Much Are Arts Optical International Holdings Limited (HKG:1120) Insiders Spending On Buying Shares?

It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Arts Optical International Holdings Limited (HKG:1120), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for Arts Optical International Holdings

The Last 12 Months Of Insider Transactions At Arts Optical International Holdings

The Founder & Executive Chairman Hoi Ying Ng made the biggest insider purchase in the last 12 months. That single transaction was for HK$19m worth of shares at a price of HK$1.60 each. That means that an insider was happy to buy shares at above the current price of HK$0.79. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Over the last year, we can see that insiders have bought 14.01m shares worth HK$23m. But insiders sold 60.00k shares worth HK$98k. In total, Arts Optical International Holdings insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Arts Optical International Holdings 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

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. Arts Optical International Holdings insiders own 61% of the company, currently worth about HK$186m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Arts Optical International Holdings Tell Us?

It doesn't really mean much that no insider has traded Arts Optical International Holdings shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like Arts Optical International Holdings insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for 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. For instance, we've identified 2 warning signs for Arts Optical International Holdings (1 doesn't sit too well with us) you should be aware of.

But note: Arts Optical International Holdings 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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This article by Simply Wall St is general in nature. 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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