Insiders In Shanghai Bao Pharmaceuticals Still Down 37% On CN¥7.37m Investment

Insiders who bought CN¥7.37m worth of Shanghai Bao Pharmaceuticals Co., Ltd. (HKG:2659) stock in the last year have seen some of their losses recouped as the stock gained 13% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling CN¥2.7m.

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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Shanghai Bao Pharmaceuticals Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Co-Founder & Executive Chairman Liu Yanjun for HK$3.6m worth of shares, at about HK$24.33 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$9.05). 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. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Liu Yanjun was the only individual insider to buy shares in the last twelve months.

Liu Yanjun bought 513.30k shares over the last 12 months at an average price of HK$14.35. 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!

View our latest analysis for Shanghai Bao Pharmaceuticals

Shanghai Bao Pharmaceuticals 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.

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. Shanghai Bao Pharmaceuticals insiders own about HK$897m worth of shares (which is 31% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Shanghai Bao Pharmaceuticals Tell Us?

It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Shanghai Bao Pharmaceuticals. Looks promising! 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. Case in point: We've spotted 2 warning signs for Shanghai Bao Pharmaceuticals you should be aware of, and 1 of them is potentially serious.

Of course Shanghai Bao Pharmaceuticals 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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