Insider Buyers At Risecomm Group Holdings Likely Disappointed With 15% Slide

Insiders who acquired CN¥18.8m worth of Risecomm Group Holdings Limited's (HKG:1679) stock at an average price of CN¥0.57 in the past 12 months may be dismayed by the recent 15% price decline. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth CN¥8.43m, which is not what they expected.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Risecomm Group Holdings

Risecomm Group Holdings Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Xiaoqin Fu for HK$11m worth of shares, at about HK$0.57 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.26). 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.

Over the last year, we can see that insiders have bought 33.05m shares worth HK$19m. On the other hand they divested 14.40m shares, for HK$8.2m. In the last twelve months there was more buying than selling by Risecomm Group Holdings insiders. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Risecomm Group Holdings is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Insider Ownership Of Risecomm Group 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. Risecomm Group Holdings insiders own about HK$39m worth of shares (which is 60% of the company). 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 Do The Risecomm Group Holdings Insider Transactions Indicate?

Insider buying and selling have balanced each other out in the last three months, so we can't deduct anything useful from these recent trades. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Risecomm Group Holdings insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. While it's good to be aware of 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. Our analysis shows 5 warning signs for Risecomm Group Holdings (3 shouldn't be ignored!) and we strongly recommend you look at these before investing.

Of course Risecomm Group 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.