Insider Purchases Worth HK$252.0m See Losses As Kafelaku Coffee Holding Market Value Drops To HK$134m

The recent price decline of 12% in Kafelaku Coffee Holding Limited's (HKG:1869) stock may have disappointed insiders who bought HK$252.0m worth of shares at an average price of HK$0.46 in 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 HK$52.0m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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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 even when the share price was higher than HK$0.095 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. 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.

While Kafelaku Coffee Holding insiders bought shares during the last year, they didn't sell. They paid about HK$0.46 on average. These transactions suggest that insiders have considered the current price attractive. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. 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.

Insider Ownership Of Kafelaku Coffee Holding

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Kafelaku Coffee Holding insiders own 52% of the company, worth about HK$70m. 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 Kafelaku Coffee Holding Insiders?

The fact that there have been no Kafelaku Coffee Holding insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Kafelaku Coffee Holding insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Kafelaku Coffee Holding. Be aware that Kafelaku Coffee Holding is showing 3 warning signs in our investment analysis, and 2 of those can't be ignored...

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.