Insider Purchases Worth HK$34.8m See Losses As Eminence Enterprise Market Value Drops To HK$82m

Insiders who bought HK$34.8m worth of Eminence Enterprise Limited's (HKG:616) stock at an average buy price of HK$0.11 over the last year may be disappointed by the recent 21% decrease in the stock. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth HK$25.9m, which is not what they expected.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

The Last 12 Months Of Insider Transactions At Eminence Enterprise

The insider Nin Yiu Chu made the biggest insider purchase in the last 12 months. That single transaction was for HK$12m worth of shares at a price of HK$0.092 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.081). 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. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

In the last twelve months insiders purchased 319.37m shares for HK$35m. On the other hand they divested 46.20m shares, for HK$6.7m. Overall, Eminence Enterprise insiders were net buyers during the last year. Their average price was about HK$0.11. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Check out our latest analysis for Eminence Enterprise

Eminence Enterprise 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.

Eminence Enterprise Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Eminence Enterprise. In total, insider Lo Chiu Chan sold HK$2.6m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

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. A high insider ownership often makes company leadership more mindful of shareholder interests. Eminence Enterprise insiders own 44% of the company, currently worth about HK$36m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Eminence Enterprise Tell Us?

An insider hasn't bought Eminence Enterprise stock in the last three months, but there was some selling. In contrast, they appear keener if you look at the last twelve months. On top of that, insiders own a significant portion of the company. So the recent selling doesn't worry us. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To help with this, we've discovered 5 warning signs (2 are potentially serious!) that you ought to be aware of before buying any shares in Eminence Enterprise.

Of course Eminence Enterprise 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.