Hong Lai Huat Group Insiders Lose Out As Stock Sinks To S$0.052

The recent price decline of 10% in Hong Lai Huat Group Limited's (SGX:CTO) stock may have disappointed insiders who bought S$333.7k worth of shares at an average price of S$0.067 in the past 12 months. 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 S$260.0k, which is not great.

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.

See our latest analysis for Hong Lai Huat Group

The Last 12 Months Of Insider Transactions At Hong Lai Huat Group

The Executive Deputy Chairman & Group CEO Bee Huat Ong made the biggest insider purchase in the last 12 months. That single transaction was for S$264k worth of shares at a price of S$0.066 each. That means that an insider was happy to buy shares at above the current price of S$0.052. Their view may have changed since then, but at least it shows they felt optimistic at the time. 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 Bee Huat Ong.

Bee Huat Ong purchased 5.00m shares over the year. The average price per share was S$0.067. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership Of Hong Lai Huat Group

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Hong Lai Huat Group insiders own about S$16m worth of shares (which is 60% 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.

So What Does This Data Suggest About Hong Lai Huat Group Insiders?

The fact that there have been no Hong Lai Huat Group insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Hong Lai Huat Group insiders think the business has merit. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example, Hong Lai Huat Group has 4 warning signs (and 3 which shouldn't be ignored) we think you should know about.

Of course Hong Lai Huat Group 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.