Insiders In Zhongzheng International Still Down 80% On HK$240.4m Investment

Insiders who bought HK$240.4m worth of Zhongzheng International Company Limited (HKG:943) stock in the last year recovered part of their losses as the stock rose by 10.0% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling HK$193m.

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.

See our latest analysis for Zhongzheng International

Zhongzheng International Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Thiam Herr Low bought HK$219m worth of shares at a price of HK$0.099 per share. That means that an insider was happy to buy shares at above the current price of HK$0.011. 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 if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Happily, we note that in the last year insiders paid HK$240m for 4.31b shares. But insiders sold 1.41b shares worth HK$7.0m. In the last twelve months there was more buying than selling by Zhongzheng International insiders. They paid about HK$0.056 on average. These transactions suggest that insiders have considered the current 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!

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

Does Zhongzheng International Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Zhongzheng International insiders own about HK$71m worth of shares (which is 51% of the company). 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 Zhongzheng International Tell Us?

It doesn't really mean much that no insider has traded Zhongzheng International shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Zhongzheng International insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Zhongzheng International. Our analysis shows 5 warning signs for Zhongzheng International (2 are potentially serious!) and we strongly recommend you look at them before investing.

But note: Zhongzheng International 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 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.