Li Xu Spends CN¥7.4m On SenseTime Group Stock

Those following along with SenseTime Group Inc. (HKG:20) will no doubt be intrigued by the recent purchase of shares by Li Xu, Co-Founder of the company, who spent a stonking HK$7.4m on stock at an average price of HK$1.49. While that only increased their holding size by 0.9%, it is still a big swing by our standards.

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The Last 12 Months Of Insider Transactions At SenseTime Group

Over the last year, we can see that the biggest insider purchase was by Co-founder Bing Xu for HK$11m worth of shares, at about HK$1.10 per share. We do like to see buying, but this purchase was made at well below the current price of HK$1.50. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

While SenseTime Group insiders bought shares during the last year, they didn't sell. The average buy price was around HK$1.23. To my mind it is good that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

View our latest analysis for SenseTime Group

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Insider Ownership Of SenseTime Group

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It's great to see that SenseTime Group insiders own 23% of the company, worth about HK$13b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The SenseTime Group Insider Transactions Indicate?

The recent insider purchase is heartening. 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. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about SenseTime Group. That's what I like to see! So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that SenseTime Group has 1 warning sign and it would be unwise to ignore it.

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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.