Insider Buyers At China Zenith Chemical Group Likely Disappointed With 25% Slide

Insiders who acquired HK$10.1m worth of China Zenith Chemical Group Limited's (HKG:362) stock at an average price of HK$0.085 in the past 12 months may be dismayed by the recent 25% price decline. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth HK$2.51m, which is not great.

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

See our latest analysis for China Zenith Chemical Group

China Zenith Chemical Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Joint Non-Executive Chairperson Chai Suang Lai bought HK$3.9m worth of shares at a price of HK$0.079 per share. That means that even when the share price was higher than HK$0.021 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. 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.

In the last twelve months insiders purchased 119.32m shares for HK$10m. But insiders sold 31.50m shares worth HK$3.2m. Overall, China Zenith Chemical Group insiders were net buyers during the last year. 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!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

China Zenith Chemical Group Insiders Bought Stock Recently

It's good to see that China Zenith Chemical Group insiders have made notable investments in the company's shares. We can see that Joint Non-Executive Chairperson Chai Suang Lai paid HK$6.5m for shares in the company. No-one sold. That shows some optimism about the company's future.

Does China Zenith Chemical Group Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 34% of China Zenith Chemical Group shares, worth about HK$9.6m. 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 China Zenith Chemical Group Tell Us?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Insiders likely see value in China Zenith Chemical Group shares, given these transactions (along with notable insider ownership of the company). 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. To that end, you should learn about the 6 warning signs we've spotted with China Zenith Chemical Group (including 5 which can't be ignored).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.