Insider Purchases Worth CN¥43.2m See Losses As Fengyinhe Holdings Market Value Drops To HK$430m
The recent price decline of 22% in Fengyinhe Holdings Limited's (HKG:8030) stock may have disappointed insiders who bought CN¥43.2m worth of shares at an average price of CN¥4.81 in the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth CN¥11.0m, which is not great.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Fengyinhe Holdings
The insider Chengjun Niu made the biggest insider purchase in the last 12 months. That single transaction was for HK$12m worth of shares at a price of HK$4.05 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$1.23). 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.
Over the last year, we can see that insiders have bought 8.98m shares worth HK$43m. But insiders sold 550.00k shares worth HK$2.8m. Overall, Fengyinhe Holdings insiders were net buyers during the last year. Their average price was about HK$4.81. 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. By clicking on the graph below, you can see the precise details of each insider transaction!
View our latest analysis for Fengyinhe Holdings
Fengyinhe Holdings 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.
Insiders At Fengyinhe Holdings Have Bought Stock Recently
At Fengyinhe Holdings,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, insider Hong Chen bought HK$1.7m worth of shares in that time. But we did see insider Chengjun Niu sell shares worth HK$351k. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
Does Fengyinhe Holdings Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Fengyinhe Holdings insiders own 51% of the company, worth about HK$221m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Do The Fengyinhe Holdings Insider Transactions Indicate?
It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest Fengyinhe Holdings insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 3 warning signs for Fengyinhe Holdings (1 is potentially serious!) that we believe deserve your full attention.
But note: Fengyinhe Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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.