Dongwu Cement International Gains 19%, Insider Trades Reap Benefit

Insiders who bought Dongwu Cement International Limited (HKG:695) stock in the last 12 months were richly rewarded last week. The company's market value increased by HK$243m as a result of the stock's 19% gain over the same period. In other words, the original HK$3.88m purchase is now worth HK$6.84m.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Dongwu Cement International

Dongwu Cement International Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Executive Chairman Dong Liu for HK$1.7m worth of shares, at about HK$1.66 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of HK$2.74. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

In the last twelve months insiders purchased 2.50m shares for HK$3.9m. But they sold 1.03m shares for HK$1.4m. In the last twelve months there was more buying than selling by Dongwu Cement International insiders. 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!

Dongwu Cement International is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Does Dongwu Cement International Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Dongwu Cement International insiders own about HK$1.0b worth of shares (which is 67% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Dongwu Cement International Tell Us?

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. It would be great to see more insider buying, but overall it seems like Dongwu Cement International insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 2 warning signs for Dongwu Cement International you should be aware of, and 1 of these is a bit unpleasant.

But note: Dongwu Cement 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.