BabyTree Group (HKG:1761) insiders need another CN¥268k to breakeven on a CN¥42m stock purchase even after recent gains

By
Simply Wall St
Published
May 11, 2022
SEHK:1761
Source: Shutterstock

Insiders who purchased CN¥42m worth of BabyTree Group (HKG:1761) shares over the past year recouped some of their losses after price gained 11% last week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at CN¥268k since the time of purchase.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for BabyTree Group

BabyTree Group Insider Transactions Over The Last Year

The CFO & Executive Director Chong Xu made the biggest insider purchase in the last 12 months. That single transaction was for HK$20m worth of shares at a price of HK$1.03 each. That means that even when the share price was higher than HK$0.69 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Chong Xu was the only individual insider to buy during the last year. Notably Chong Xu was also the biggest seller.

Chong Xu bought a total of 60.26m shares over the year at an average price of HK$0.69. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
SEHK:1761 Insider Trading Volume May 11th 2022

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership of BabyTree Group

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. BabyTree Group insiders own about HK$299m worth of shares. That equates to 26% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The BabyTree Group Insider Transactions Indicate?

It doesn't really mean much that no insider has traded BabyTree Group shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. With high insider ownership and encouraging transactions, it seems like BabyTree Group insiders think the business has merit. 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. In terms of investment risks, we've identified 1 warning sign with BabyTree Group and understanding this should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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