Guangdong - Hong Kong Greater Bay Area Holdings (HKG:1396 shareholders incur further losses as stock declines 16% this week, taking five-year losses to 84%

We're definitely into long term investing, but some companies are simply bad investments over any time frame. We don't wish catastrophic capital loss on anyone. For example, we sympathize with anyone who was caught holding Guangdong - Hong Kong Greater Bay Area Holdings Limited (HKG:1396) during the five years that saw its share price drop a whopping 84%. And we doubt long term believers are the only worried holders, since the stock price has declined 71% over the last twelve months. The last week also saw the share price slip down another 16%. While a drop like that is definitely a body blow, money isn't as important as health and happiness.

Since Guangdong - Hong Kong Greater Bay Area Holdings has shed HK$91m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Guangdong - Hong Kong Greater Bay Area Holdings

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

In the last half decade Guangdong - Hong Kong Greater Bay Area Holdings saw its share price fall as its EPS declined below zero. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. But we would generally expect a lower price, given the situation.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on Guangdong - Hong Kong Greater Bay Area Holdings' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market gained around 4.7% in the last year, Guangdong - Hong Kong Greater Bay Area Holdings shareholders lost 71%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 13% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Guangdong - Hong Kong Greater Bay Area Holdings is showing 4 warning signs in our investment analysis , and 2 of those don't sit too well with us...

Guangdong - Hong Kong Greater Bay Area Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

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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.