Insiders Who Purchased HK$45.1m Of Kwan On Holdings Stock May Not Have Expected 12% Tumble

The recent price decline of 12% in Kwan On Holdings Limited's (HKG:1559) stock may have disappointed insiders who bought HK$45.1m worth of shares at an average price of HK$0.07 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 HK$32.9m, which is not great.

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.

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Kwan On Holdings Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Jinhua Ren bought HK$45m worth of shares at a price of HK$0.07 per share. That means that an insider was happy to buy shares at above the current price of HK$0.051. 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. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Kwan On Holdings insiders may have bought shares in the last year, but they didn't sell any. 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!

View our latest analysis for Kwan On Holdings

Kwan On Holdings 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.

Kwan On Holdings Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Kwan On Holdings. Overall, three insiders shelled out HK$45m for shares in the company -- and none sold. This makes one think the business has some good points.

Insider Ownership Of Kwan On Holdings

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Kwan On Holdings insiders own 61% of the company, currently worth about HK$86m 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 Do The Kwan On Holdings Insider Transactions Indicate?

It is good to see recent purchasing. 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. When combined with notable insider ownership, these factors suggest Kwan On Holdings insiders are well aligned, and quite possibly think the share price is too low. Nice! 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. To help with this, we've discovered 4 warning signs (2 are a bit unpleasant!) that you ought to be aware of before buying any shares in Kwan On Holdings.

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.