Insiders' S$13.2m Investments In Red Following mm2 Asia's S$6.5m Dip In Market Value

The recent price decline of 10.0% in mm2 Asia Ltd.'s (SGX:1B0) stock may have disappointed insiders who bought S$13.2m worth of shares at an average price of S$0.017 in the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth S$7.01m, which is not what they expected.

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.

View our latest analysis for mm2 Asia

The Last 12 Months Of Insider Transactions At mm2 Asia

Over the last year, we can see that the biggest insider purchase was by insider Jingwei Zhang for S$13m worth of shares, at about S$0.017 per share. That means that an insider was happy to buy shares at above the current price of S$0.009. Their view may have changed since then, but at least it shows they felt optimistic at the time. 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.

mm2 Asia insiders may have bought shares in the last year, but they didn't sell any. 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!

mm2 Asia is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Insiders At mm2 Asia Have Bought Stock Recently

Over the last quarter, mm2 Asia insiders have spent a meaningful amount on shares. Specifically, insider Seng Hui Goi bought S$156k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.

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. We usually like to see fairly high levels of insider ownership. mm2 Asia insiders own 45% of the company, currently worth about S$26m based on the recent share price. 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 mm2 Asia Tell Us?

It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. 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 mm2 Asia. That's what I like to see! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To help with this, we've discovered 3 warning signs (2 are significant!) that you ought to be aware of before buying any shares in mm2 Asia.

Of course mm2 Asia may not be the best stock to buy. So you may wish to see this free collection of high quality 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.