Digital Domain Holdings Insiders Up HK$182m On HK$606.5m Investment

Insiders who bought Digital Domain Holdings Limited (HKG:547) in the last 12 months may probably not pay attention to the stock's recent 17% drop. After accounting for the recent loss, the HK$606.5m worth of shares they purchased is now worth HK$788.4m, suggesting a good return on their investment.

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.

Check out our latest analysis for Digital Domain Holdings

The Last 12 Months Of Insider Transactions At Digital Domain Holdings

The insider Xiaohu Wang made the biggest insider purchase in the last 12 months. That single transaction was for HK$244m worth of shares at a price of HK$0.46 each. That means that even when the share price was higher than HK$0.36 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Happily, we note that in the last year insiders paid HK$607m for 2.19b shares. But insiders sold 414.73m shares worth HK$100m. In total, Digital Domain Holdings insiders bought more than they sold over the last year. The average buy price was around HK$0.28. To my mind it is good that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. 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!

Digital Domain Holdings 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.

Insiders At Digital Domain Holdings Have Sold Stock Recently

The last three months saw significant insider selling at Digital Domain Holdings. In total, insider Cheang Ng dumped HK$98m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Digital Domain Holdings insiders own about HK$1.2b worth of shares (which is 43% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Digital Domain Holdings Insiders?

An insider hasn't bought Digital Domain Holdings stock in the last three months, but there was some selling. On the other hand, the insider transactions over the last year are encouraging. On top of that, insiders own a significant portion of the company. So we're not too bothered by recent selling. 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. For instance, we've identified 2 warning signs for Digital Domain Holdings (1 is a bit concerning) you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.