Insiders See CN¥108.5m Investment In Kangda International Environmental Jump Last Week

Kangda International Environmental Company Limited (HKG:6136) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 12% resulting in a HK$104m addition to the company’s market value. In other words, the original CN¥108.5m purchase is now worth CN¥130.9m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

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Kangda International Environmental Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Chuan Liang Duan bought HK$108m worth of shares at a price of HK$0.35 per share. We do like to see buying, but this purchase was made at well below the current price of HK$0.42. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

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!

See our latest analysis for Kangda International Environmental

Kangda International Environmental is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Kangda International Environmental Insiders Bought Stock Recently

There has been significantly more insider buying, than selling, at Kangda International Environmental, over the last three months. In total, insider Chuan Liang Duan bought HK$108m worth of shares in that time. But we did see CFO & Executive Director Wei Zhou sell shares worth HK$5.6m. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Does Kangda International Environmental Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Kangda International Environmental insiders own about HK$398m worth of shares (which is 41% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Kangda International Environmental Tell Us?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Kangda International Environmental. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 2 warning signs for Kangda International Environmental you should be aware of.

But note: Kangda International Environmental 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 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.