Stock Analysis

Insiders may be rethinking their CN¥13m InvesTech Holdings Limited (HKG:1087) investment now that the company has lost HK$19m in value

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The recent 26% drop in InvesTech Holdings Limited's (HKG:1087) stock could come as a blow to insiders who purchased CN¥13m worth of stock at an average buy price of CN¥1.42 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 CN¥4.3m.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

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InvesTech Holdings Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Executive Director Yat Yu Tin for HK$3.6m worth of shares, at about HK$1.80 per share. That means that an insider was happy to buy shares at above the current price of HK$0.47. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing 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.

InvesTech Holdings insiders may have bought shares in the last year, but they didn't sell any. They paid about HK$1.42 on average. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

SEHK:1087 Insider Trading Volume March 17th 2023

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

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. InvesTech Holdings insiders own about HK$11m worth of shares. That equates to 21% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At InvesTech Holdings Tell Us?

It doesn't really mean much that no insider has traded InvesTech Holdings shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think InvesTech Holdings insiders are doubting the company, and they do own shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing InvesTech Holdings. While conducting our analysis, we found that InvesTech Holdings has 2 warning signs and it would be unwise to ignore these.

But note: InvesTech Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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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