Insiders Re-Evaluate Their CN¥9.98m Stock Purchase As Newlink Technology Falls To HK$368m

Simply Wall St · 10/14 23:57

Insiders who acquired CN¥9.98m worth of Newlink Technology Inc.'s (HKG:9600) stock at an average price of CN¥2.56 in the past 12 months may be dismayed by the recent 20% price decline. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth CN¥1.52m, which is not what they expected.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Newlink Technology

The Last 12 Months Of Insider Transactions At Newlink Technology

Over the last year, we can see that the biggest insider purchase was by CEO & Executive Chairman of the Board Shuchun Zhai for HK$5.1m worth of shares, at about HK$2.68 per share. That means that even when the share price was higher than HK$0.39 (the recent price), an insider wanted to purchase shares. 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 when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. The only individual insider to buy over the last year was Shuchun Zhai.

Shuchun Zhai bought a total of 3.90m shares over the year at an average price of HK$2.56. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
SEHK:9600 Insider Trading Volume October 14th 2024

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Newlink Technology insiders own 56% of the company, currently worth about HK$205m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Newlink Technology Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like Newlink Technology insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. 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. Every company has risks, and we've spotted 4 warning signs for Newlink Technology (of which 2 are a bit unpleasant!) you should know about.

Of course Newlink Technology 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.