Insiders might want to re-evaluate their CN¥11m stock purchase as China Ludao Technology Company Limited (HKG:2023) drops to HK$541m

By
Simply Wall St
Published
November 17, 2021
SEHK:2023
Source: Shutterstock

Insiders who bought CN¥11m worth of China Ludao Technology Company Limited's (HKG:2023) stock at an average buy price of CN¥1.16 over the last year may be disappointed by the recent 11% decrease in the stock. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth CN¥10.0m which is not ideal.

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 Ludao Technology

China Ludao Technology Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Executive Chairman & CEO Yuerong Yu bought HK$1.5m worth of shares at a price of HK$1.17 per share. That means that an insider was happy to buy shares at above the current price of HK$1.10. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. 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 Yuerong Yu.

Yuerong Yu purchased 9.08m shares over the year. The average price per share was HK$1.16. 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!

insider-trading-volume
SEHK:2023 Insider Trading Volume November 17th 2021

China Ludao Technology 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

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. China Ludao Technology insiders own 49% of the company, currently worth about HK$266m based on the recent share price. 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 Do The China Ludao Technology Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. Judging from their transactions, and high insider ownership, China Ludao Technology insiders feel good about the company's future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we've found that China Ludao Technology has 4 warning signs (1 is a bit unpleasant!) that deserve your attention before going any further with your analysis.

But note: China Ludao 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.

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