Reversal Of Fortune For Heng Tai Consumables Group Insiders Who Made A HK$7.75m Purchase

Insiders who bought HK$7.75m worth of Heng Tai Consumables Group Limited (HKG:197) stock in the last year have seen some of their losses recouped as the stock gained 11% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled HK$4.1m since the time of purchase.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Heng Tai Consumables Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Yin Man Chow bought HK$7.1m worth of shares at a price of HK$0.35 per share. That means that an insider was happy to buy shares at above the current price of HK$0.16. 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. In our view, the price an insider pays for shares is very important. 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 Yin Man Chow.

Yin Man Chow bought 22.22m shares over the last 12 months at an average price of HK$0.35. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Check out our latest analysis for Heng Tai Consumables Group

Heng Tai Consumables Group 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.

Does Heng Tai Consumables 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. We usually like to see fairly high levels of insider ownership. Heng Tai Consumables Group insiders own 41% of the company, currently worth about HK$12m 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 Heng Tai Consumables Group Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like Heng Tai Consumables Group insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. While it's good to be aware of 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 instance, we've identified 3 warning signs for Heng Tai Consumables Group (2 don't sit too well with us) you should be aware of.

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.

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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.