Insider Buyers Lose HK$555k As Pacific Legend Group Sheds HK$4.9m

The recent 14% drop in Pacific Legend Group Limited's (HKG:8547) stock could come as a blow to insiders who purchased HK$3.24m worth of stock at an average buy price of HK$0.14 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only HK$2.68m.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Pacific Legend Group

The Last 12 Months Of Insider Transactions At Pacific Legend Group

The insider Kwai Shan Wong made the biggest insider purchase in the last 12 months. That single transaction was for HK$1.3m worth of shares at a price of HK$0.12 each. That means that even when the share price was higher than HK$0.11 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. 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.

Over the last year, we can see that insiders have bought 23.94m shares worth HK$3.2m. On the other hand they divested 3.98m shares, for HK$776k. In total, Pacific Legend Group insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

Pacific Legend Group 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.

Insiders At Pacific Legend Group Have Bought Stock Recently

It's good to see that Pacific Legend Group insiders have made notable investments in the company's shares. We can see that insider Kwai Shan Wong paid HK$2.1m for shares in the company. No-one sold. This could be interpreted as suggesting a positive outlook.

Insider Ownership Of Pacific Legend Group

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Pacific Legend Group insiders own about HK$11m worth of shares. That equates to 35% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Pacific Legend Group Insiders?

It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Pacific Legend Group shares, given these transactions (along with notable insider ownership of the company). In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Pacific Legend Group. To help with this, we've discovered 3 warning signs (2 are a bit unpleasant!) that you ought to be aware of before buying any shares in Pacific Legend Group.

Of course Pacific Legend Group 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.