Insiders' CN¥4.60m Investments In Red Following Litian Pictures Holdings' HK$4.0m Dip In Market Value

The recent 11% drop in Litian Pictures Holdings Limited's (HKG:9958) stock could come as a blow to insiders who purchased CN¥4.60m worth of stock at an average buy price of CN¥0.10 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only CN¥4.05m.

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.

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Litian Pictures Holdings Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Tin Sek Lee bought HK$4.6m worth of shares at a price of HK$0.10 per share. That means that an insider was happy to buy shares at above the current price of HK$0.088. 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. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Tin Sek Lee was the only individual insider to buy shares in the last twelve months. We note that Tin Sek Lee was both the biggest buyer and the biggest seller.

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!

View our latest analysis for Litian Pictures Holdings

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).

Litian Pictures Holdings Insiders Bought Stock Recently

There has been significantly more insider buying, than selling, at Litian Pictures Holdings, over the last three months. In total, insider Tin Sek Lee bought HK$4.6m worth of shares in that time. On the other hand, insider Tin Sek Lee netted HK$2.9m by selling. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Litian Pictures Holdings insiders own 42% of the company, currently worth about HK$13m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Litian Pictures Holdings Insiders?

It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Litian Pictures Holdings insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Litian Pictures Holdings. Be aware that Litian Pictures Holdings is showing 5 warning signs in our investment analysis, and 3 of those can't be ignored...

But note: Litian Pictures Holdings 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.