Insiders Of Paradise Entertainment Reap Rewards After Their Investment Jumps Another HK$32m

Last week, Paradise Entertainment Limited (HKG:1180) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 17% last week, resulting in a HK$142m increase in the company's market worth, implying a 39% gain on their initial purchase. Put another way, the original HK$81.4m acquisition is now worth HK$113.5m.

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 Paradise Entertainment

Notably, that recent purchase by MD & Executive Chairman Jay Chun was not the only time they bought Paradise Entertainment shares this year. They previously made an even bigger purchase of HK$39m worth of shares at a price of HK$0.75 per share. We do like to see buying, but this purchase was made at well below the current price of HK$0.94. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Jay Chun bought 120.07m shares over the last 12 months at an average price of HK$0.68. 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!

See our latest analysis for Paradise Entertainment

Paradise Entertainment is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

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. We usually like to see fairly high levels of insider ownership. It's great to see that Paradise Entertainment insiders own 74% of the company, worth about HK$735m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Paradise Entertainment Insider Transactions Indicate?

The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Paradise Entertainment. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for Paradise Entertainment you should be aware of.

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.