Eminence Enterprise Insiders HK$5.9m Short Of Breakeven On Stock Purchase

Some of the losses seen by insiders who purchased HK$55.3m worth of Eminence Enterprise Limited (HKG:616) shares over the past year were recovered after the stock increased by 42% over the past 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 HK$5.9m since the time of purchase.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Eminence Enterprise

The Last 12 Months Of Insider Transactions At Eminence Enterprise

In fact, the recent purchase by Nin Yiu Chu was the biggest purchase of Eminence Enterprise shares made by an insider individual in the last twelve months, according to our records. We do like to see buying, but this purchase was made at well below the current price of HK$0.13. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Happily, we note that in the last year insiders paid HK$55m for 385.88m shares. On the other hand they divested 35.10m shares, for HK$7.3m. Overall, Eminence Enterprise insiders were net buyers during the last year. Their average price was about HK$0.14. I'd consider this a positive as it suggests insiders see value at around the current price. 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!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insiders At Eminence Enterprise Have Bought Stock Recently

Over the last quarter, Eminence Enterprise insiders have spent a meaningful amount on shares. In total, insiders bought HK$19m worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.

Does Eminence Enterprise Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Eminence Enterprise insiders own about HK$52m worth of shares. That equates to 40% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Eminence Enterprise Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Given that insiders also own a fair bit of Eminence Enterprise we think they are probably pretty confident of a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Eminence Enterprise. For instance, we've identified 4 warning signs for Eminence Enterprise (2 are potentially serious) 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.