Need To Know: Cheuk Nang (Holdings) Limited (HKG:131) Insiders Have Been Buying Shares

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in Cheuk Nang (Holdings) Limited (HKG:131).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

View our latest analysis for Cheuk Nang (Holdings)

The Last 12 Months Of Insider Transactions At Cheuk Nang (Holdings)

Over the last year, we can see that the biggest insider purchase was by Founder Sze-Tsung Chao for HK$34m worth of shares, at about HK$2.10 per share. Even though the purchase was made at a significantly lower price than the recent price (HK$2.97), we still think insider buying is a positive. 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.

Sze-Tsung Chao purchased 27.67m shares over the year. The average price per share was HK$2.10. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Cheuk Nang (Holdings) is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership of Cheuk Nang (Holdings)

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. It's great to see that Cheuk Nang (Holdings) insiders own 75% of the company, worth about HK$1.4b. 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 Cheuk Nang (Holdings) Tell Us?

It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest Cheuk Nang (Holdings) insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! While we like knowing 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. While conducting our analysis, we found that Cheuk Nang (Holdings) has 3 warning signs and it would be unwise to ignore these.

Of course Cheuk Nang (Holdings) 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, but not derivative transactions.

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This article by Simply Wall St is general in nature. 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.
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