China Motor Bus Company Insiders May Regret Not Buying More, Market Cap Hits HK$2.7b

Insiders who bought China Motor Bus Company, Limited (HKG:26) stock in the last 12 months were richly rewarded last week. The company's market value increased by HK$292m as a result of the stock's 12% gain over the same period. Put another way, the original HK$1.56m acquisition is now worth HK$1.77m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for China Motor Bus Company

China Motor Bus Company Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Director Anthony Grahame Stott bought HK$532k worth of shares at a price of HK$53.20 per share. So it's clear an insider wanted to buy, at around the current price, which is HK$59.00. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for China Motor Bus Company share holders is that an insider was buying at near the current price. The only individual insider to buy over the last year was Anthony Grahame Stott.

Anthony Grahame Stott bought 30.00k shares over the last 12 months at an average price of HK$52.14. The chart below shows insider transactions (by companies and individuals) over the last year. 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.

Insider Ownership Of China Motor Bus Company

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. China Motor Bus Company insiders own 55% of the company, currently worth about HK$1.5b based on the recent share price. 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 Do The China Motor Bus Company Insider Transactions Indicate?

It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Once you factor in the high insider ownership, it certainly seems like insiders are positive about China Motor Bus Company. That's what I like to see! 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. While conducting our analysis, we found that China Motor Bus Company has 2 warning signs and it would be unwise to ignore them.

Of course China Motor Bus Company may not be the best stock to buy. So you may wish to see this free collection of high quality 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 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.