Insiders' CN¥204.8m Investments In Red Following Zhongshen Jianye Holding's HK$80m Dip In Market Value

The recent price decline of 25% in Zhongshen Jianye Holding Limited's (HKG:2503) stock may have disappointed insiders who bought CN¥204.8m worth of shares at an average price of CN¥0.53 in 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¥81.2m.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Zhongshen Jianye Holding

Over the last year, we can see that the biggest insider purchase was by insider Yan Wang for HK$143m worth of shares, at about HK$0.53 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being HK$0.21). Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

In the last twelve months Zhongshen Jianye Holding insiders were buying shares, but not selling. 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 Zhongshen Jianye Holding

Zhongshen Jianye Holding 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

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It's great to see that Zhongshen Jianye Holding insiders own 65% of the company, worth about HK$156m. 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 Zhongshen Jianye Holding Insiders?

It doesn't really mean much that no insider has traded Zhongshen Jianye Holding shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Zhongshen Jianye Holding insiders think the business has merit. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Our analysis shows 4 warning signs for Zhongshen Jianye Holding (3 don't sit too well with us!) and we strongly recommend you look at these before investing.

Of course Zhongshen Jianye Holding 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.