Those following along with China HK Power Smart Energy Group Limited (HKG:931) will no doubt be intrigued by the recent purchase of shares by Che Kin Kan, Executive Chairman of the company, who spent a stonking HK$6.7m on stock at an average price of HK$0.41. There's no denying a buy of that magnitude suggests conviction in a brighter future, although we do note that proportionally it only increased their holding by 0.6%.

The Last 12 Months Of Insider Transactions At China HK Power Smart Energy Group

In fact, the recent purchase by Executive Chairman Che Kin Kan was not their only acquisition of China HK Power Smart Energy Group shares this year. They previously made an even bigger purchase of HK$300m worth of shares at a price of HK$0.43 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.41). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Che Kin Kan was the only individual insider to buy shares in the last twelve months. Notably Che Kin Kan was also the biggest seller.

Che Kin Kan purchased 797.40m shares over the year. The average price per share was HK$0.43. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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.

Does China HK Power Smart Energy Group 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. China HK Power Smart Energy Group insiders own about HK$1.1b worth of shares (which is 40% 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.

So What Do The China HK Power Smart Energy Group Insider Transactions Indicate?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. Once you factor in the high insider ownership, it certainly seems like insiders are positive about China HK Power Smart Energy Group. That's what I like to see! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, China HK Power Smart Energy Group has 2 warning signs (and 1 which is potentially serious) we think you should know about.

Of course China HK Power Smart Energy Group 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.