Insiders Could Have Profited By Holding onto Bonjour Holdings Shares Despite 13% Drop

Even though Bonjour Holdings Limited (HKG:653) has fallen by 13% over the past week , insiders who sold HK$52m worth of stock over the past year have had less luck. Insiders would probably have been better off holding on to their shares given that the average selling price of HK$0.25 is still lower than the current share price.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Bonjour Holdings

The Last 12 Months Of Insider Transactions At Bonjour Holdings

In the last twelve months, the biggest single purchase by an insider was when Executive Chairman of the Board Jianwen Chen bought HK$33m worth of shares at a price of HK$0.16 per share. That means that an insider was happy to buy shares at above the current price of HK$0.12. 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 268.91m shares for HK$43m. But insiders sold 207.24m shares worth HK$52m. All up, insiders sold more shares in Bonjour Holdings than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

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Insiders At Bonjour Holdings Have Bought Stock Recently

At Bonjour Holdings,over the last quarter, we have observed quite a lot more insider buying than insider selling. In fact, two insiders bought HK$42m worth of shares. But insiders only sold shares worth HK$35m. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

Does Bonjour Holdings Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Bonjour Holdings insiders own 54% of the company, worth about HK$30m. 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 Bonjour Holdings Tell Us?

The recent insider purchases are heartening. On the other hand the transaction history, over the last year, isn't so positive. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Bonjour Holdings insiders are reasonably well aligned, and optimistic for the future. 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 3 warning signs with Bonjour Holdings and understanding them should be part of your investment process.

Of course Bonjour 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 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.