Digital Domain Holdings Insiders Up HK$246m On HK$794.4m Investment

Insiders who purchased Digital Domain Holdings Limited (HKG:547) shares in the past 12 months are unlikely to be deeply impacted by the stock's 14% decline over the past week. After accounting for the recent loss, the HK$794.4m worth of shares they purchased is now worth HK$1.04b, suggesting a good return on their investment.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View 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 an insider was happy to buy shares at above the current price of HK$0.35. 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. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Over the last year, we can see that insiders have bought 2.97b shares worth HK$794m. But insiders sold 1.20b shares worth HK$298m. Overall, Digital Domain Holdings insiders were net buyers during the last year. The average buy price was around HK$0.27. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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

Digital Domain Holdings Insiders Bought Stock Recently

Over the last three months, we've seen significantly more insider buying, than insider selling, at Digital Domain Holdings. In total, two insiders bought HK$421m worth of shares in that time. On the other hand, insiders netted HK$199m by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

Does Digital Domain Holdings Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Digital Domain Holdings insiders own about HK$1.6b worth of shares (which is 56% 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?

It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. When combined with notable insider ownership, these factors suggest Digital Domain Holdings insiders are well aligned, and quite possibly think the share price is too low. Nice! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Digital Domain Holdings. When we did our research, we found 2 warning signs for Digital Domain Holdings (1 is significant!) that we believe deserve your full attention.

But note: Digital Domain Holdings 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.