The recent 16% drop in Star Plus Legend Holdings Limited's (HKG:6683) stock could come as a blow to insiders who purchased CN¥213.0m worth of stock at an average buy price of CN¥7.10 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only CN¥149.1m.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
Star Plus Legend Holdings Insider Transactions Over The Last Year
The insider Yuan Zhang made the biggest insider purchase in the last 12 months. That single transaction was for HK$213m worth of shares at a price of HK$7.10 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$4.97). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was Yuan Zhang.
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!
Star Plus Legend 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.
Insider Ownership Of Star Plus Legend Holdings
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Star Plus Legend Holdings insiders own about HK$2.8b worth of shares (which is 68% of the company). 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 Does This Data Suggest About Star Plus Legend Holdings Insiders?
The fact that there have been no Star Plus Legend Holdings insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Star Plus Legend Holdings insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Star Plus Legend Holdings. Our analysis shows 4 warning signs for Star Plus Legend Holdings (2 are significant!) and we strongly recommend you look at them before investing.
But note: Star Plus Legend 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.
