Insiders Who Purchased HK$252.0m Of Kafelaku Coffee Holding Stock May Not Have Expected 11% Tumble

Insiders who acquired HK$252.0m worth of Kafelaku Coffee Holding Limited's (HKG:1869) stock at an average price of HK$0.46 in the past 12 months may be dismayed by the recent 11% price decline. 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 HK$63.5m.

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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The Last 12 Months Of Insider Transactions At Kafelaku Coffee Holding

Over the last year, we can see that the biggest insider purchase was by insider Wei Zhang for HK$224m worth of shares, at about HK$1.00 per share. That means that an insider was happy to buy shares at above the current price of HK$0.12. 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. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

Kafelaku Coffee Holding insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around HK$0.46. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

See our latest analysis for Kafelaku Coffee Holding

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Kafelaku Coffee Holding Insiders Bought Stock Recently

Over the last quarter, Kafelaku Coffee Holding insiders have spent a meaningful amount on shares. insider Wei Zhang spent HK$224m on stock, and there wasn't any selling. That shows some optimism about the company's future.

Does Kafelaku Coffee Holding Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company 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. It's great to see that Kafelaku Coffee Holding insiders own 52% of the company, worth about HK$85m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Kafelaku Coffee Holding Tell Us?

It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. 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 Kafelaku Coffee Holding. One for the watchlist, at least! 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. Every company has risks, and we've spotted 3 warning signs for Kafelaku Coffee Holding (of which 2 are significant!) you should know about.

Of course Kafelaku Coffee Holding 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.