Daido Group Insiders Enjoying HK$6.4m Appreciation On HK$12.3m Investment

Daido Group Limited (HKG:544) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 10% resulting in a HK$8.1m addition to the company’s market value. In other words, the original HK$12.3m purchase is now worth HK$18.8m.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At Daido Group

In the last twelve months, the biggest single purchase by an insider was when insider Yuhang LI bought HK$5.0m worth of shares at a price of HK$2.00 per share. That means that an insider was happy to buy shares at above the current price of HK$1.90. It's very possible they regret the purchase, but it's more likely they are bullish about the company. 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.

Over the last year, we can see that insiders have bought 9.89m shares worth HK$12m. But they sold 5.43m shares for HK$7.1m. Overall, Daido Group insiders were net buyers during the last year. They paid about HK$1.25 on average. We don't deny that it is nice to see insiders buying stock in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. The chart below shows insider transactions (by companies and individuals) over the last year. 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 Daido Group

Daido 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.

Daido Group Insiders Are Selling The Stock

The last three months saw significant insider selling at Daido Group. In total, insiders dumped HK$7.0m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Does Daido Group Boast High Insider Ownership?

Many investors like to check how much of a company is owned by 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 appears that Daido Group insiders own 25% of the company, worth about HK$21m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Daido Group Tell Us?

Insiders sold stock recently, but they haven't been buying. But we take heart from prior transactions. It's good to see insiders are shareholders. So we're not overly bothered by recent selling. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 4 warning signs for Daido Group (2 can't be ignored!) and we strongly recommend you look at these before investing.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.