Possible turnaround for Golden Eagle Retail Group Limited (HKG:3308) insiders, still down CN¥7.4m after a CN¥77m shopping spree

Published
June 29, 2022
SEHK:3308
Source: Shutterstock

Insiders who bought CN¥77m worth of Golden Eagle Retail Group Limited (HKG:3308) stock in the last year recovered part of their losses as the stock rose by 4.3% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled CN¥7.4m since the time of purchase.

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.

See our latest analysis for Golden Eagle Retail Group

Golden Eagle Retail Group Insider Transactions Over The Last Year

In fact, the recent purchase by Executive Chairman Hung Wang was not their only acquisition of Golden Eagle Retail Group shares this year. Earlier in the year, they paid HK$6.84 per share in a HK$5.4m purchase. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$5.76). It's very possible they regret the purchase, but it's more likely they are bullish about the company. 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 when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Hung Wang was the only individual insider to buy during the last year.

Hung Wang bought a total of 12.14m shares over the year at an average price of HK$6.37. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
SEHK:3308 Insider Trading Volume June 29th 2022

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Golden Eagle Retail Group insiders own 70% of the company, worth about HK$6.7b. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Golden Eagle Retail Group Insiders?

It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Golden Eagle Retail Group insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 1 warning sign with Golden Eagle Retail Group and understanding it should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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