Reversal Of Fortune For Cornerstone Technologies Holdings Insiders Who Made A HK$16.0m Purchase

Insiders who bought HK$16.0m worth of Cornerstone Technologies Holdings Limited (HKG:8391) stock in the last year recovered part of their losses as the stock rose by 10.0% last week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at HK$5.4m since the time of purchase.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

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Cornerstone Technologies Holdings Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Executive Director Yanyan Wu for HK$15m worth of shares, at about HK$0.50 per share. That means that an insider was happy to buy shares at above the current price of HK$0.33. It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

While Cornerstone Technologies Holdings insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

View our latest analysis for Cornerstone Technologies 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).

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 20% of Cornerstone Technologies Holdings shares, worth about HK$70m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Cornerstone Technologies Holdings Tell Us?

The fact that there have been no Cornerstone Technologies Holdings insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Cornerstone Technologies Holdings and their transactions don't cause us concern. 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. When we did our research, we found 4 warning signs for Cornerstone Technologies Holdings (3 don't sit too well with us!) that we believe deserve your full attention.

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.