Futong Technology Development Holdings' HK$14m Market Cap Fall Books Insider Losses

Insiders who acquired CN¥1.70m worth of Futong Technology Development Holdings Limited's (HKG:465) stock at an average price of CN¥1.00 in the past 12 months may be dismayed by the recent 11% price decline. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth CN¥612.7k which is not ideal.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Futong Technology Development Holdings

The Last 12 Months Of Insider Transactions At Futong Technology Development Holdings

Over the last year, we can see that the biggest insider purchase was by Executive Chairman of the Board Jian Chen for HK$1.7m worth of shares, at about HK$1.00 per share. That means that even when the share price was higher than HK$0.36 (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. 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 when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. The only individual insider to buy over the last year was Jian Chen.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Does Futong Technology Development Holdings Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Futong Technology Development Holdings insiders own about HK$89m worth of shares (which is 79% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Futong Technology Development Holdings Tell Us?

It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Futong Technology Development Holdings. Looks promising! 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. At Simply Wall St, we've found that Futong Technology Development Holdings has 3 warning signs (1 is significant!) that deserve your attention before going any further with your analysis.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.